Dear Teroxx Community,
This week we saw a market of digital assets with two contrasting halves of the week. While the first half was very positive, it was followed by a negative second half of the week.
As usual, we are also providing detailed videos for those who want to delve deeper into the subject.
Digital Asset News
Banking giant JPMorgan takes over First Republic Bank after it is shut down by US regulators. The California Department of Financial Protection and Innovation ordered FRB closed on 1 May and reached an agreement with the state insurance FDIC as receiver. The FDIC then entered into a purchase and assumption agreement with JPMorgan to protect depositors.
JPMorgan intends to acquire all of First Republic Bank’s assets, including uninsured deposits. FRB currently has $229.1 billion in assets and $103.9 billion in deposits.
On 26 April, FRB ran into trouble as news of a government receivership spread. The bank’s shares plummeted rapidly after the announcement. The days following the announcement were even worse for the bank. The regulators eventually decided to close the bank.
FRB is the latest US bank to collapse in 2023, after Silicon Valley Bank and Signature Bank.
Cameron Winklevoss, the co-founder and CEO of New York-based crypto exchange Gemini, accuses US regulators of double standards in handling the First Republic Bank crisis.
If First Republic were a “crypto bank”, it would have been “pulled the plug weeks ago”, as Winklevoss criticises accordingly.
It should be noted that First Republic started to have “structural problems” on its books when Silicon Valley Investment Bank and Silvergate Bank were closed or wound up by US regulators. Winklevoss’ allegations are in line with critical open letters recently written by three Republican members of the Parliamentary Financial Services Committee, in which the politicians want to know from the government and its agencies whether there is a coordinated crackdown on American crypto companies.
The management of the major American crypto exchange Coinbase went public with its regulatory problems on 27 April, with Chief Legal Counsel Paul Grewal speaking out on the one hand at the crypto conference Consensus 2023 and on the other hand through a joint video with Coinbase CEO Brian Armstrong on YouTube.
This move comes in response to a so-called “Wells Notice” that the crypto company received from the US Securities and Exchange Commission (SEC) a few weeks ago. In such a notice, the agency officially warns that it may initiate criminal proceedings against the receiver.
“At no point did Coinbase abandon the principle of compliance,” Grewal tells the SEC in the video. “We’re sitting here on this stage literally begging for regulation, begging for new regulations, begging for a legislative framework for this new technology so we can finally register.”
In the video, Grewal goes on to argue that Coinbase’s business model has not changed in the last two years since the crypto exchange was given the green light by the SEC to go public on Nasdaq. At that time, the legal advisor had still stated that it “appears that the SEC sees no authority in itself to regulate companies like Coinbase”.
This clearly shows how opaque the behaviour of the American regulatory authorities currently is. Since the FTX issue, some have even accused the SEC of “panic”, which in the end will not be beneficial for any party.
Thought of the week
Temporary selling pressure can be of longer duration in the volatile environment of the digital assets market, especially after a positive quarter. Thus, a renewed upswing is not necessarily waiting after every sell-off, but consolidations and sideways phases could be the result. Potential price upswings often form through accumulations and volume increases, which can / must build up over weeks.
Digital Asset Markt
Bullish outlook: Positive global markets and a mild interest rate adjustment by the US FED on Wednesday could provide a rally in the market.
Bearish outlook: Lack of buying volume and an unexpected interest rate decision by the FED could push the sell-off further.