Bitvavo Market News - Ban on anonymous wallets?
Last week saw the continuation of price correction, coupled with a slight easing in bitcoin price volatility. The frantic pace gave way to appropriate moderation. This was until this weekend, when a report appeared detailing proposed legislation from the European Parliament. Is there to be a ban on anonymous wallets? Find out in this week's Bitvavo Market News.
Market update
The correction that began on Thursday, March 14 has intensified over the past week. Last week, the entire crypto market experienced a 12% decline at its lowest point, whereas now the drop has extended to 17%. Bitcoin's performance exactly mirrors the average decline of 17%.
So far, this decline has been slightly less than the average correction observed in this market cycle, which is around 20%. And this is despite the fact that many crypto investors have enjoyed great returns recently. Merely holding bitcoin over the last three months would have earned you a 60% return or thereabouts. Over the last six months, this would have been around 150%. And if you had purchased around the market's lowest point, your deposit would now be worth roughly four times the initial value.
The surge in optimism in recent months is largely down to the success of U.S. spot bitcoin ETFs. ETF experts can't stop talking about the unprecedented records these funds are achieving. Last week, Bloomberg analyst Eric Balchunas noted that BlackRock's bitcoin ETF was in the top five ETFs with the largest inflows in 2024: "Wild sht."
The correction in the bitcoin price coincides with a slight decline in the ETFs' combined bitcoin balance. Last week, the group of funds sold just under 14,000 bitcoins. But this pales in comparison to the growth since their launch. Even after last week, the funds still hold a positive balance of 204,000 bitcoins.
Weakness in the ETFs are evident across the board. The Grayscale fund has been slowly decreasing since the launch due to excessive management fees, but the decline this past week has accelerated remarkably. While other funds still saw inflows, these were considerably lower compared to previous weeks. All in all, this adds up to a slight decline. We are curious to see if interest in ETFs will pick up once the prices begin to rise once more.
Featured
Is your hardware wallet now illegal?
The European Parliament reached a preliminary agreement last week on a bill that affects digital assets. Several media outlets sounded the alarm by reporting: 'Your anonymous crypto wallet is now illegal.' Needless to say, these reports caused quite a stir and confusion among crypto owners.
Before we dive deeper, we'd like to reassure you on a few points:
Self-custody is not illegal.
Hardware wallets are not illegal.
Software wallets are not illegal.
Transactions to and from self-custody are not illegal.
So what was it all about?
Misinformation regarding the often complex legislative procedures within the EU is not uncommon. Multiple parties are currently working on a comprehensive financial regulation package. Within this framework lies the AMLR, or Anti Money Laundering Regulation. It's important to note that this regulation isn't specific to cryptocurrencies; rather, it is a broader law intended to combat money laundering and other financial crimes. It is aimed at financial institutions, including cryptocurrency service providers.
So what does the regulation actually state regarding anonymous wallets? In short, it states that crypto companies are prohibited from offering anonymous wallets, much like banks are not allowed to provide anonymous bank accounts. In addition, crypto companies should refrain from using anonymity-enhancing tools such as privacycoins and mixers, and should carefully monitor incoming transactions. This approach will ensure that anonymity will serve to signal the need for further scrutiny.
Service providers that have no control over their users' assets are explicitly excluded from these regulations, including software and hardware wallet suppliers, for example.
In short, crypto companies are now required to carefully do their homework, but for you, the user, little has changed.
In other news
Telegram Open Network (TON) launches growth fund with more than $100 million in cash. The TON Foundation called it a "community rewards initiative." Telegram's blockchain platform lags a little behind competing ecosystems in terms of popularity. Projects can access the fund once it goes live in April.
BlackRock launches its first tokenized fund on the Ethereum network. The fund is called BUIDL, which is short for BlackRock USD Institutional Digital Liquidity Fund. The fund invests in cash and government bonds. Each token is worth $1 and token owners receive monthly returns in the form of new tokens.
World's largest pension fund investigates exposure to bitcoin. Japan's state pension fund (GPIF) says this is part of a broader initiative that is a response to major social and economic changes. In total, the fund has $1.4 trillion under management. In addition to bitcoin, the fund is looking to diversify into gold.
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