Bybit

Coinbase market share grows outside US trading hours amid Binance saga: Report

According to Kaiko Research, Bybit experienced a rise in market share around the clock, whereas Coinbase witnessed significant growth outside of the United States trading hours.

Following cryptocurrency exchange Binance reaching a substantial multi-billion-dollar settlement with United States regulators last week, an on-chain data analytics firm reported a surge in Coinbase’s market share.

On November 21, Binance and the United States Department of Justice (DoJ) reached a settlement of $4.3 billion, settling allegations related to anti-money laundering.

However, the legal challenges have led to other crypto exchanges seeing an increase in market share, according to research firm Kaiko Research.

The firm recently published a report that indicates that Coinbase has seen an uptick in its trading volume, during the European trading day, outside the regular United States trading hours:

“Coinbase’s share grew the most outside of U.S. trading hours (14-22 UTC), instead surging in the middle of the trading day in Europe and the beginning of the trading day in eastern Asia.”

Meanwhile, Bybit is reportedly seeing significant changes across the entire day.

“Bybit is the immediate standout winner, gaining market share in every single hour and growing by more than 20% in 16 out of 24 hours,” the report stated.

Percentage change in BTC market share.

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Key Bitcoin price metrics point to BTC downside below $22.5K

BTC’s $1,420 decline in the span of an hour negatively impacted demand for stablecoins in Asia and shifted futures traders into a more defensive attitude.

Bitcoin (BTC) faced a one-hour $1,420 pullback on March 3 following Silvergate Bank’s 57.7% stock crash, which was due to significant losses and “suboptimal capitalization.” The U.S. fintech-friendly bank was a key financial infrastructure provider for exchanges, institutional investors and mining companies, and some investors are worried that its potential demise could have wide-ranging negative impacts on the crypto sector.

The crypto-friendly bank discontinued its digital asset payment railway — Silvergate Exchange Network — citing excessive risks. Silvergate also reportedly borrowed $3.6 billion from the U.S. Federal Home Loan Banks System, a consortium of regional banks and lenders, to mitigate the effects of a surge in withdrawals.

Among the impacted exchanges was Dubai-based Bybit, which announced the suspension of U.S. dollar transfers after March 10. The move follows Binance’s international platform, which suspends U.S. dollar fiat withdrawals and deposits on Feb. 6.

Fiat on- and off-ramps have always been troublesome areas due to the lack of a clear regulatory environment, especially in the United States. Additional uncertainty came from The Wall Street Journal’s March 3 report on iFinex, the holding company behind Tether and Bitfinex. Leaked documents and emails revealed the group reportedly relied on fake sales invoices and hid behind third parties to open bank accounts.

Despite a Wall Street Journal report alleging that Tether is being investigated by the Department of Justice, USDT (USDT) is still the absolute leading stablecoin, with a $71.4 billion market capitalization. The issue has spread across the industry as Paxos, the issuer of the third-largest stablecoin, was ordered by the New York Department of Financial Services on Feb. 13 to stop issuing Binance USD (BUSD).

Let’s look at Bitcoin derivatives metrics to better understand how professional traders are positioned in the current market conditions.

Derivatives metrics show buyers’ shrinking appetite

Traders should refer to the USD Coin (USDC) premium to measure the demand for cryptocurrency in Asia. The index measures the difference between China-based peer-to-peer stablecoin trades and the U.S. dollar.

Excessive cryptocurrency buying demand can pressure the indicator above fair value at 104%. On the other hand, the stablecoin’s market offer is flooded during bearish markets, causing a 4% or higher discount.

USDC peer-to-peer vs. USD/CNY. Source: OKX

The USDC premium indicator in Asian markets has been slightly positive for the past three weeks, but it is nowhere near the substantial 4% premium from early January. In addition, the metric shows weakening demand for stablecoins in Asia, down from 2.5% in the previous week.

Still, the present 1.5% premium should be interpreted as positive considering the bearish newsflow regarding crypto-fiat payment railways.

Bitcoin’s quarterly futures are the preferred instruments of whales and arbitrage desks. These fixed-month contracts usually trade at a slight premium to spot markets, indicating that sellers are requesting more money to withhold settlement longer.

Consequently, futures contracts should trade at a 5%–10% annualized premium in healthy markets. This situation is known as “contango” and is not exclusive to crypto markets.

Bitcoin 3-month futures annualized premium. Source: Laevitas

The chart shows that traders abandoned any prospects of exiting the neutral-to-bearish area on March 3 as the basis indicator moved away from the 5% threshold. However, the current 3% premium is lower than last week’s 4.5%, reflecting fewer investors’ optimism.

On the bright side, the 6.2% drop in BTC price had a near uneventful impact on Bitcoin futures markets. Higher demand for bearish bets using leverage would have moved the basis indicator to the negative area, known as “backwardation.”

Additional volatility is expected on March 14

In the week following Feb. 27, Bitcoin’s price lost 4.5%, indicating that investors are effectively worried about contagion from Silvergate Bank. Even though crypto exchanges and stablecoin providers have denied exposure to the troubled fintech firm, the cut-off from its payment processing system has raised uncertainty.

Analysts are now focused on the announcement of the Consumer Price Index (CPI) inflation data on March 14. As Cointelegraph noted, CPI prints tend to spark short-term volatility across risk assets, although often short-lived in Bitcoin’s price movements.

Derivatives metrics currently point to limited pressure from the Silvergate Bank saga, but the odds favor Bitcoin bears, considering the diminishing demand for stablecoins in Asia and the BTC futures premium.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bybit introduces Mastercard-powered debit card days after halting USD transfers

Bybit is set to roll out Mastercard-powered debit cards, allowing users to pay for goods and services with cryptocurrency holdings.

Bybit will launch a new debit card allowing users to make payments and withdraw cash using cryptocurrency holdings.

The Bybit card will operate on the Mastercard network, and will allow fiat-based transactions by debiting cryptocurrency balances when used to pay for goods and services. The service begins with the launch of a free virtual card for online purchases, while physical debit cards are set to be available in April 2023.

The service will work with Bitcoin (BTC), Ether (ETH), Tether (USDT), USD Coin (USDC) and XRP (XRP) balances on user accounts. Payments will automatically convert the balances of these initial cryptocurrencies into euros or pounds, depending on a user’s country of residence.

ATM withdrawals and global payments will be limited to aggregated cryptocurrency holdings of a user’s Bybit account. The cards are issued by London-based payments solutions provider Moorwand.

The roll-out of Bybit’s virtual and physical debit card offering comes days after the Dubai-based exchange announced it would be halting U.S. dollar bank transfers. The suspension of dollar deposits and withdrawals was pinned on “service outages” by one of its processing partners.

Bybit users can continue to make USD deposits using Advcash Wallet and credit cards, while users are urged to carry out any pending U.S. dollar wire withdrawals by March 10.

Related: Credit cards can bridge Web2 to Web3, says music industry exec

United States-based crypto exchanges and businesses were affected when Silvergate Bank announced the discontinuation of its digital assets payment network on March 4.

Meanwhile, a report at the end of February 2023 suggests that Mastercard and Visa would hold off on announcing or embarking on further direct partnerships with the cryptocurrency and blockchain industry.

Mastercard has been exploring payment options in USDC through new partnerships, while Visa has hinted at plans to allow customers to convert cryptocurrencies into fiat on its platform in 2023.

Bitcoin bears beware! BTC holds $17K as support while the S&P 500 drops 1.5%

BTC whales and market makers are holding their leveraged long positions, even though BTC failed to break above $17,400 on Dec. 5

Bitcoin (BTC) bulls regained some control on Nov. 30 and they were successful in keeping the BTC price above $16,800 for the past 5 days. While the level is lower than traders’ desired $19,000 to $20,000 target, the 8.6% gain since the Nov. 21 $15,500 low provides enough cushioning for eventual negative price surprises.

One of these instances is the United States stock market trading down 1.5% on Dec. 5 after a stronger-than-expected reading of November ISM Services fueled concerns that the U.S. Federal Reserve (Fed) will continue hiking interest rates. At the September meeting, Fed Chairman Jerome Powell indicated that the point of keeping interest rates flat “will need to be somewhat higher.”

Currently, the macroeconomic headwinds remain unfavorable and this is likely to remain the case until investors have a clearer picture of the employment market and foreign currency strength of the U.S. Dollar Index (DXY).

Excessively high levels lower the income of exporters and companies that rely on revenues outside the United States. A weak dollar also indicates a lack of confidence in the U.S. Treasury’s capacity to manage its $31.4 trillion debt.

The impact of the 2022 bear market continues to make waves as Bybit exchange decided to roll out a second round of layoffs on Dec. 4. Ben Zhou, co-founder and CEO of Bybit, announced a steep 30% reduction in the company’s workforce. The company had previously grown to over 2,000 employees in two years.

Let’s look at derivatives metrics to better understand how professional traders are positioned in the current market conditions.

Asia-based stablecoin demand drops after a 4% peak

The USD Coin (USDC) premium is a good gauge of China-based crypto retail trader demand. It measures the difference between China-based peer-to-peer trades and the United States dollar.

Excessive buying demand tends to pressure the indicator above fair value at 100%, and during bearish markets, the stablecoin’s market offer is flooded, causing a 4% or higher discount.

USDC peer-to-peer vs. USD/CNY. Source: OKX

Currently, the USDC premium stands at 100.5%, down from 103.5% on Nov. 28, so despite the failed attempts to break above the $17,500 resistance, there was no panic selling from Asian retail investors.

However, this data should not be considered bullish because the recent USDC buying pressure up to a 4% premium indicates that traders took shelter in stablecoins.

Leverage buyers ignored the recent pump to $17,400

The long-to-short metric excludes externalities that might have solely impacted the stablecoin market. It also gathers data from exchange clients’ positions on the spot, perpetual and quarterly futures contracts, thus offering better information on how professional traders are positioned.

There are occasional methodological discrepancies between different exchanges, so readers should monitor changes instead of absolute figures.

Exchanges’ top traders Bitcoin long-to-short ratio. Source: Coinglass

Even though Bitcoin gained 5.5% in seven days, professional traders have kept their leverage long positions unchanged according to the long-to-short indicator.

The ratio for Binance traders improved from 1.05 on Nov. 28 to the current 1.09 level. Meanwhile, Huobi displayed a modest decrease in its long-to-short ratio, with the indicator moving from 1.07 to 1.03 in the seven days until Dec. 5.

At OKX exchange, the metric increased from 0.98 on Nov. 28 to the current 1.01 ratio. So, on average, traders have kept their leverage ratio during the week, which is disappointing data considering the price gain.

Related: USDC issuer Circle terminates SPAC merger with Concord

The $16.8 support is gaining strength, but derivatives show mild buying demand

These two derivatives metrics — stablecoin premium and top traders’ long-to-short — suggest that leverage buyers did not back the Bitcoin price rally to $17,400 on Dec. 5.

A more bullish sentiment would have moved the Asian stablecoin premium above 3% and the long-to-short ratio higher versus the previous week. The present data from those two markets reduce the odds of a sustainable rally above $17,400. Still, a 3.5% decline toward the $16,500 support should not cause concern because both metrics showed no sign of leveraged bearish bets being formed.

In short, the bearish sentiment prevails, but bears are becoming less confident even as Bitcoin price trades flat and the S&P 500 index declined by 1.5%.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

$15.5K retest is more likely, according to Bitcoin futures and options

Bybit launching a $100 million fund and Binance’s proof of reserves might have marked the cycle low at $15,500.

Bitcoin (BTC) has been trading near $16,500 since Nov. 23, recovering from a dip to $15,500 as investors feared the imminent insolvency of Genesis Global, a cryptocurrency lending and trending company. Genesis stated on Nov. 16 that it would “temporarily suspend redemptions and new loan originations in the lending business.” 

After causing initial mayhem in the markets, the firm refuted speculation of “imminent” bankruptcy on Nov. 22, although it confirmed difficulties in raising money. More importantly, Genesis’ parent company Digital Currency Group (DCG) owns Grayscale — the asset manager behind Grayscale Bitcoin Trust, which holds some 633,360 BTC.

Contagion risks from the FTX-Alameda Research implosion continue to exert negative pressure on the markets, but the industry is working to improve transparency and insolvency risks. For example, on Nov. 24, crypto derivatives exchange Bybit launched a $100 million fund to help market makers and high-frequency trading institutions struggling with financial or operational difficulties.

More recently, on Nov. 25, Binance published a Merkle Tree-backed proof of funds for its Bitcoin deposits. Moreover, the exchange outlined how users can use the mechanism to verify their holdings. There’s no doubt that centralized institutions must embrace transparency and insurance mechanisms to regain investors’ trust.

First, however, one must analyze Bitcoin derivatives markets to fully understand how professional traders are digesting such news.

Futures market discount improved slightly but remains far from bullish

Fixed-month futures contracts usually trade at a slight premium to regular spot markets because sellers demand more money to withhold settlement for longer. Technically known as contango, this situation is not exclusive to crypto assets.

In healthy markets, futures should trade at a 4% to 8% annualized premium, which is enough to compensate for the risks plus the cost of capital. The opposite, when the demand for bearish bets is exceptionally high, causes a discount on futures markets — known as backwardation.

Bitcoin 2-month futures annualized premium. Source: Laevitas.ch

Considering the data above, it becomes evident that derivatives traders flipped bearish on Nov. 9, as the Bitcoin futures premium flipped negative. Yet, according to futures markets, the $15,500 dip on Nov. 21 was not enough to instill additional demand for leveraged short positions.

Option markets confirm the bearishness

Traders should analyze options markets to understand whether Bitcoin will likely retest the $15,500 support. The 25% delta skew is a telling sign whenever arbitrage desks and market makers are overcharging for upside or downside protection.

The indicator compares similar call (buy) and put (sell) options and will turn positive when fear is prevalent because the protective put options premium is higher than risk call options.

In a nutshell, the skew metric will move above 10% if traders fear a Bitcoin price crash. On the other hand, generalized excitement reflects a negative 10% skew.

Bitcoin 60-day options 25% delta skew: Source: Laevitas

As displayed above, the 25% delta skew has been above the 10% threshold since Nov. 9, indicating options traders are pricing a higher risk of unexpected price dumps. Currently at 18%, it signals investors are fearful and reflects a lack of interest in offering downside protection.

Related: How bad is the current state of crypto? On-chain analyst explains

A surprise pump will likely cause more impact

Considering that both Bitcoin futures and options markets are currently pricing higher odds of a downside, there is no reason to believe that an eventual retest of the $15,500 bottom would cause massive liquidations.

Furthermore, the slight reduction in the futures discount shows the bears’ lack the confidence to open leverage shorts at current price levels. Even though Bitcoin derivatives data remains bearish, the surprise of an eventual bull run to $18,000 is likely to cause more havoc. But, for now, the bears remain in control according to BTC futures and options data.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

The ‘launch of a rocket’ — Observers on the future of Ethereum post-Merge

With the Ethereum Merge only hours away, Cointelegraph spoke to industry experts about the transition to proof-of-stake today and what to look out for.

The Ethereum Merge is set to occur later today with the energy-efficiency focused transition expected to have a major impact on crypto investment and adoption, experts say. 

Speaking to Cointelegraph in the lead up to the Merge, StarkWare president and co-founder Eli Ben-Sasson noted that the Ethereum Merge will be the “first step in a process that will lead to exceedingly widespread adoption of Ethereum.”

The immediate importance of the Merge is the dramatic effect on energy consumption.

The Merge is expected to see Ethereum’s energy cut by 99.95% compared to its current Proof-of-Work (PoW) consensus mechanism, which requires large amounts of energy to be used in a competition to solve arbitrary mathematical puzzles.

“I think of the Merge like the development of the first solar fields,” added Ben-Sasson.

“We saw that we can slash the environmental impact of electricity production. We didn’t say ‘problem solved,’ but rather that if we’re generating electricity with less pollution, it’s time to double down on efforts to use the power more sparingly.”

Ben-Sasson believes the end result where the general population uses blockchain-based apps in many different areas of life, “and as naturally as people use smartphone apps today.”

CEO of crypto exchange Coinjar, Asher Tan says the Merge is set to change the narrative around crypto more broadly, pointing out that it’s incredibly rare for a tech sector to “execute such a drastic reduction in their energy intensity.”

“We believe that people are underselling the significance of the post-Merge 99.95% drop in energy usage,” noted Tan.

It makes the Ethereum network far more publicly palatable and opens the door for investors and companies that had remained crypto-agnostic due to its carbon footprint.

Despite optimism about Ethereum’s transition, there is still debate on whether the Merge has already been factored into Ether (ETH) price or not.

Charmyn Ho, head of crypto insights at crypto exchange Bybit, says their analysts have concluded there is “no consensus” amongst institutional investors or market makers regarding short-term trading around The Merge, but will instead be more likely to accumulate ETH and become hodlers.

Related: Only 10 hours to the Ethereum Merge: Here’s what you need to know

Meanwhile, most within the Ethereum “bubble” don’t appear to be concerned over whether the Merge will be a success or not.

Ethereum Co-Founder Joseph Lubin told Bloomberg yesterday he believes the transition will result in very little disruption to developers and users, and will be “as smooth as if your iPhone or laptop has upgraded its operating system overnight.”

StarkWare’s Ben-Sasson also sees the transition being a smooth one, suggesting the “Ethereum Foundation has prepared so meticulously for this moment, and inspires lots of confidence,” noting:

 “It will be a significant mark of success when the first block is produced by proof of stake. But this is like completing the launch of a rocket — we still have the rest of the journey ahead of us, which will pose its challenges.”

Lubin suggests that in his opinion, this is the third most important event in the crypto space, behind only the development of Bitcoin and Ethereum.

The ‘launch of a rocket’ — Observers on the future of Ethereum post-Merge

With the Ethereum Merge only hours away, Cointelegraph spoke to industry experts about the transition to proof-of-stake today and what to look out for.

The Ethereum Merge is set to occur on Sept. 15 at around 6am UTC, with the energy-efficiency-focused transition expected to have a major impact on crypto investment and adoption, experts say. 

Speaking to Cointelegraph in the lead-up to the Merge, StarkWare president and co-founder Eli Ben-Sasson noted that the Ethereum Merge will be the “first step in a process that will lead to exceedingly widespread adoption of Ethereum:”

“The immediate importance of the Merge is the dramatic effect on energy consumption.”

The Merge is expected to see Ethereum’s energy cut by 99.95% compared to its current proof-of-work (PoW) consensus mechanism, which requires large amounts of energy to be used in a competition to solve arbitrary mathematical puzzles.

“I think of the Merge like the development of the first solar fields,” added Ben-Sasson.

“We saw that we can slash the environmental impact of electricity production. We didn’t say ‘problem solved,’ but rather that if we’re generating electricity with less pollution, it’s time to double down on efforts to use the power more sparingly.”

Ben-Sasson believes the end result is when the general population uses blockchain-based apps in many different areas of life, “and as naturally as people use smartphone apps today.”

CEO of crypto exchange Coinjar, Asher Tan says the Merge is set to change the narrative around crypto more broadly, pointing out that it’s incredibly rare for a tech sector to “execute such a drastic reduction in their energy intensity.”

“We believe that people are underselling the significance of the post-Merge 99.95% drop in energy usage,” noted Tan:

“It makes the Ethereum network far more publicly palatable and opens the door for investors and companies that had remained crypto-agnostic due to its carbon footprint.”

Despite optimism about Ethereum’s transition, there is still debate on whether the Merge has already been factored into Ether’s (ETH) price or not.

Charmyn Ho, head of crypto insights at crypto exchange Bybit, says their analysts have concluded there is “no consensus” among institutional investors or market makers regarding short-term trading around the Merge, but will instead be more likely to accumulate ETH and become hodlers.

Related: Only 10 hours to the Ethereum Merge: Here’s what you need to know

Meanwhile, most within the Ethereum “bubble” don’t appear to be concerned over whether the Merge will be a success or not.

Ethereum co-founder Joseph Lubin told Bloomberg yesterday he believes the transition will result in very little disruption to developers and users and will be “as smooth as if your iPhone or laptop has upgraded its operating system overnight.”

StarkWare’s Ben-Sasson also sees the transition being a smooth one, suggesting that the “Ethereum Foundation has prepared so meticulously for this moment, and inspires lots of confidence,” noting:

“It will be a significant mark of success when the first block is produced by proof of stake. But this is like completing the launch of a rocket — we still have the rest of the journey ahead of us, which will pose its challenges.”

Lubin suggests that in his opinion, this is the third most important event in the crypto space, behind only the development of Bitcoin (BTC) and Ethereum.

Ethereum Merge and the hefty tax bill you could be in for

The Ethereum Merge may constitute a taxable event if it results in a chain-splitting hard fork, tax experts warn.

Ether (ETH) hodlers that don’t play their cards right following the Ethereum Merge may be in for a hefty bill come tax time, according to tax experts. 

Around Sept. 15, the Ethereum blockchain is set to transition from its current proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS), aimed at improving the network’s impact on the environment.

There is a chance that The Merge will result in a contentious hard fork, which will cause ETH holders to receive duplicate units of hard-forked Ethereum tokens, similar to what happened when the Ethereum and Ethereum Classic hard fork occurred in 2016. 

Tax compliance firm TaxBit head of government solutions, Miles Fuller, told Cointelegraph that the Merge raises some interesting tax implications in the case that a hard fork occurs, stating:

“The biggest question for tax purposes is whether the Merge will result in a chain-splitting hard fork.”

“If it doesn’t, then there are really no tax implications,” explained Fuller, noting that the current PoW ETH will just become the new PoS ETH “and everyone goes on their merry way.”

However, should a hard fork occur, meaning ETH holders are sent duplicate PoW tokens, then a variety of tax impacts may fall out “depending on how well supported the PoW ETH chain is” and where the ETH is held when the fork occurs. 

For ETH held in user-owned on-chain wallets, Fuller points to IRS guidance stating that any new PoW ETH tokens would be regarded as income and will be valued at the time the user came in possession of the tokens. 

Fuller explained the situation may be different for ETH held in custodial wallets, such as exchanges, depending on whether the platform decides to support the forked PoW ETH chain, noting:

“How custodians and exchanges handle forks is generally covered in your account agreement, so if you are not sure, you should read up.”

“If the custodian or exchange does not support the forked chain, then you likely don’t have any income (and may have missed out on a freebie). You can avoid this by moving your holdings to an unhosted wallet pre-Merge to ensure you get any coins (or tokens) resulting from a possible chain-splitting fork,” he explained.

The performance of the PoW token can also impact the potential tax bill, according to a Wednesday Twitter post from CoinLedger director of strategy Miles Brooks:

“If the value of the tokens goes down severely subsequent to the PoW fork (and after you have control over them) — which could be likely — you may have a tax bill to pay but potentially not enough assets to pay it.”

Brooks suggested it may be in an investor’s best interests to sell some of the tokens upon receiving the forked coin, which can ensure that at least the tax bill is covered.

There has been a growing push by Ethereum miners and some exchanges for a PoW hard fork to occur, as without a hard fork these miners will be forced to move to another PoW cryptocurrency.

Vitalik Buterin suggested at the 5th Ethereum Community Conference held in July that these miners could instead go back to Ethereum Classic.

Related: 3 reasons why Ethereum PoW hard fork tokens won’t gain traction

Contrary to what is suggested in the associated CoinLedger article, the post-merge Ethereum will not be called ETH 2.0 but simply ETH or ETHS, with any potential forked token referred to as ETHW.

Crypto investors should be wary of any tokens that claim to be ETH 2.0 post-Merge. 

The cryptocurrency exchange Poloniex, which claims it was the first exchange to support both Ethereum and Ethereum Classic, has given its support to a hard fork and has already added trading for ETHW.

Cryptocurrency exchange Bybit told Cointelegraph that in the event of forked tokens, Bybit’s risk management and security teams have criteria in place to determine whether a PoW token would be listed on their exchange.

Bybit claims that exchanges already listing ETHW tokens are putting profits over user safety, and caution traders against moving their ETH to exchanges that are supporting the PoW tokens due to volatility and security risks:

“We caution traders that the potential Ethereum PoW forks may be extremely volatile and entail increased security risks. Exchanges that are already listing tokens for potential PoW forks are putting profits over user safety.”