ProBit Bits — ProBit Global’s Weekly Blockchain Bits Vol. 53

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 Standard Chartered, Matrixport Predict Bullish Future for Bitcoin

Last week was a fun week for crypto, as it saw an established financial institution make a bold price prediction for the top cryptocurrency, Bitcoin. Standard Chartered said the Bitcoin price could reach $100,000 by the end of 2024 based on three possible factors: recent banking sector turmoil, stabilized risk assets once the U.S. Fed ends the rate-hiking cycle, and improved crypto mining profits.

Backing the higher price for Bitcoin chorus is Jihan Wu’s Matrixport, whose team suggests that the price of Bitcoin may reach around $45,000 by the end of this year based on the thesis that the U.S. 10-year bond yield starting to trade below 3.50% indicates inflation, which could impact risk assets like Bitcoin.

 Coinbase Responds to SEC’s Court Action Threat

Last week saw Coinbase share its bold response to the Wells Notice it received from the Securities and Exchange Commission (SEC) informing it of a pending enforcement action. Coinbase responded by urging the SEC not to pursue the action, claiming it would harm the public and the SEC itself. It would also discourage companies from being transparent and sharing information with the SEC, which could impede the SEC's mission of protecting investors, promoting efficient markets, and facilitating capital formation. The U.S.-based exchange contends that it does not fall under the SEC's jurisdiction, and proposed charges would deprive millions of U.S. retail users of the benefits of using a well-regulated digital asset platform and custodian when they stake their assets. It further argues that the SEC's lack of engagement with Coinbase raises equitable concerns that would bar an enforcement action from proceeding.

Coinbase also released a 14-minute video featuring CEO, Brian Armstrong, and Chief Legal Officer, Paul Grewal, in which they raised their concerns against SEC’s moves and propose a possible way forward.

 Hong Kong Engages Banks, Crypto Businesses on Accessing Banking Services

In line with their efforts to promote sustainable and responsible development of the virtual asset (VA) sector, the Hong Kong Monetary Authority (HKMA) last week says it has been in discussions with banks in Hong Kong to emphasize that there are no legal or regulatory barriers preventing them from providing banking services to VA entities. The financial regulator expects regulated virtual asset service providers (VASPs) to be able to apply for a bank account through a reasonable process. It warns, however, that banks may be more cautious when processing account opening applications for VA businesses with higher anti-money laundering risks.

HKMA plans to address potential misunderstandings by banks and facilitate discussions between the banking industry and VASPs on various matters, including account opening.

The news comes as the CEO of Hong Kong’s Securities and Futures Commission, Julia Leung, disclosed that they plan to release guidelines on the licensing regime for VASPs in May.

 Google Authenticator 4.0 Expands 2FA Support For Lost Devices

Google Authenticator last week version 4.0 of its app for Android and iOS devices, which makes it impossible for users to lose their 2FA codes even if they uninstall the app or lose the device on which it was installed. The new version enables users to synchronize generated verification codes to all Google accounts and devices. The release comes as Google Cloud launched its Web3 Startups Program to provide relevant projects with needed resources, including up to $200,000 in Google Cloud credits over two years. In other enterprise developments, Filecoin announced the launch of Filecoin Web Services (FWS) as an open-source alternative to AWS, Google Cloud and Azure.

UK Consults on Modifying Tax Treatment for DeFi

Following past discussions with various stakeholders to identify the key concerns and options for change, the UK government last week started seeking views on modifying the tax treatment of decentralized finance (DeFi) lending and staking.

The consultation, which is set to run for eight weeks (from 27 April 2023 to 22 June 2023), is aimed at creating a regime that better aligns with the taxation of crypto assets used in DeFi lending and staking transactions whilst reducing the administrative burden on users. The proposed changes suggest that the use of crypto assets in DeFi transactions should not be classed as asset disposals and should therefore not incur a tax disposal. Rather, tax implications would only arise when crypto assets are economically disposed of in non-DeFi transactions.

 US Sanctions Alleged North Korean Crypto Laundering Facilitators  

Three people were last week sanctioned by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) for helping the Democratic People’s Republic of Korea (DPRK) launder stolen cryptocurrencies. Wu Huihui, a PRC-based OTC crypto trader, Cheng Hung Man, a Hong Kong-based OTC trader, and Sim Hyon Sop of KKBC, allegedly coordinated millions of dollars for the DPRK regime and its unlawful weapons of mass destruction and ballistic missile programs. Last week also saw the Specially Designated Nationals list updated to include multiple cryptocurrency addresses like Bitcoin, which are linked to individuals implicated in the DPRK sanctions.

 South African Founder Ordered to Pay Back $3.5 Billion in Bitcoin Fraud Scheme

In its largest fraudulent scheme involving Bitcoin, the US Commodity Futures Trading Commission (CFTC) last week secured an order of default judgment and permanent injunction against Cornelius Johannes Steynberg to pay $1,733,838,372 in restitution to fraud victims.

Steynberg, from South Africa, will also be required to pay a $1,733,838,372 civil monetary penalty in what has been dubbed the highest civil monetary penalty ordered in any CFTC case.

Steynberg founded Mirror Trading International Proprietary Limited (MTI) which reportedly accepted at least 29,421 Bitcoin from about 23,000 individuals in the U.S., and other parts of the world between May 2018 and March 2021 in a fraudulent multilevel marketing scheme to participate in an unregistered commodity pool. The accepted Bitcoin from pool participants, worth over $1,733,838,372 at the end of March 2021, was reportedly misappropriated.  

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