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Bitcoin’s big month: Did US institutions prevail over Asian retail traders?

There may be no single reason for BTC’s 39% January price gain, but some suspect institutional investors. Can their impact be quantified, though?

Bitcoin experienced the second-strongest January in its history — and the best since 2013 — rising nearly 40% amid wide reports that institutional investors were back on board.

Zhong Yang Chan, head of research at CoinGecko, told Cointelegraph that there were “net institutional inflows into digital asset funds in January 2023, particularly in the last two weeks, with Bitcoin the largest beneficiary.”

Meanwhile, a Jan. 30 CoinShares blog noted that the total assets under management in digital asset investment products — a good gauge of institutional participation — had risen to $28 billion, led by Bitcoin (BTC), which was up 43% from November 2022’s low point in the current cycle.

The reasons for this bullishness varied depending on whom one asked, ranging from macro factors like a pause in inflation growth to more technical reasons like a squeeze on BTC short sellers. Elsewhere, a research report from Matrixport noted that institutional investors are “not giving up on crypto,” further suggesting that as much as 85% of Bitcoin buying in January was the result of U.S. institutional players. The cryptocurrency services provider added that many investors had used the U.S. Jan. 12 Consumer Price Index print “as a confirmation signal to buy Bitcoin and other crypto assets.”

Almost all gains were during U.S. market hours

But how did Matrixport come to attribute up to 85% of monthly BTC growth to U.S. institutional investors? As the Singapore-based firm explained in its recent market overview: “The most astonishing statistic is that almost all of the +40% year-to-date rally in Bitcoin has happened during US market hours. […] That’s 85% of the Bitcoin move.” Matrixport continued:

“We have always worked with the assumption that Asia is driven by retail investors, and the US is driven by institutional investors.”

So, if Bitcoin’s market price rises during U.S. market trading hours but falls during Asian trading hours, as seemed to be happening in January, can one assume that U.S. institutional investors were buying Bitcoin while Asian retail traders were selling it — a sort of yin-and-yang action? Apparently so. During U.S. trading hours, “institutions, aka ‘stable hands,’” were taking advantage of the dips, added Matrixport.

Recent: State of play: Decentralized domain services reflect on industry progress

Is this really what drove BTC’s price upward in January? “In my personal opinion, the assumption that Asian retail and U.S. institutional investors are two main drivers of net Bitcoin flows is valid,” Keone Hon, co-founder and CEO at Monad Labs — which developed the Monad blockchain — told Cointelegraph. There are other market participants, of course; but when looking at flows, “irregular ones” have the largest impact, continued Hon:

“In the current market, institutional players represent a potentially new — or renewed — source of demand similar to early 2021. Meanwhile, on the retail side, Asia-centric exchanges like Binance, Bybit, Okex and Huobi represent a majority of spot volume and nearly all of the derivatives volume.”

Others, though, aren’t so sure. “There is no way to confirm that U.S. markets are driven by institutional investors and Asian markets are driven by retail players since we don’t have data related to the identity of traders,” Jacob Joseph, research analyst at CryptoCompare, told Cointelegraph.

Granted, there is a “sentiment” or belief that large retail interest exists in Asia, “especially in Korea, as KRW represents the fourth-largest trading pair after USDT, BUSD and USD,” continued Joseph, but it can’t really be quantified.

Still, he acknowledged that the Matrixport report was interesting, adding, “Our data shows that more than two-thirds of the BTC returns in January can be attributed to the U.S. market hours, and our historical hourly data also shows that an above-average volume is traded during these hours.”

Justin d’Anethan, institutional sales director at the Amber Group — a Singapore-based digital asset firm — told Cointelegraph, “I don’t really have metrics to say whether 85% is on point or not.” He was inclined to see the January rally as broad and macro-driven, especially with inflation heading lower and expectations that the U.S. Federal Reserve won’t keep raising rates. He added:

“You can see equities, gold, real estate, and, yes, crypto gaining. That’s probably driven by large institutions and smaller investors alike, especially when FOMO kicks in.”

D’Anethan also looked at Coinbase’s recent premium index, “which is in the green but not massively. That’s typically a good metric to see if bigger American entities are on a shopping spree. Right now, it looks muted, positive, but probably just reallocating cash that was sitting on the sidelines.”

Jacob said that a better way to gauge U.S. institutional activity is to look at exchanges “that cater their services solely to them.” Along these lines, “CME Group, the largest institutional exchange in crypto, saw its monthly volume rise 59% in January,” while LMAX Digital, another institutional-focused exchange, “also saw its trading volumes rise 84.1%, higher than the average increase in trading volume on other exchanges.”

Then, too, who’s to say Asian retail traders aren’t operating during U.S. market hours? Chan, for instance, acknowledged that while the markets “do tend to move more during U.S. hours,” CoinGecko believes that this is “more a reflection of the outsized influence that U.S. monetary policy currently has on the crypto market and broader financial markets. Traders are most active when they believe markets are volatile, and in the current environment, Asian traders may have also gravitated toward ‘Fed watching’ to catch potential market movements.”

Chris Kuiper, director of research at Fidelity Digital Assets, told Cointelegraph that there isn’t a single event or catalyst that one can point to, to explain Bitcoin’s recent price movement. But to him, “It’s not surprising given the conditions that have been forming — namely, the increasing amount of illiquid coins, coins that haven’t moved in over a year — and the continued outflow of coins from exchanges.” Both factors make for a lower supply of BTC “and create conditions ripe for higher moves.”

Kuiper also cited the futures and derivatives market as a factor in BTC’s climb, “with a large amount of shorts getting liquidated over the past few weeks.” D’Anethan, too, mentioned “short-sellers getting squeezed” as a possible driver. “In itself, it’s not a cause for [prices] going up, but when things do rise, it accelerates it.”

Looking ahead

Be that as it may, if one agrees that January held some promise for Bitcoin on the institutional front, can one necessarily assume that it will persist through 2023?

“As the market gains clarity on which players avoided contagion, we’ll see an uptick in new entrants that were sidelined during the back half of last year, particularly as innovative custody agreements emerge to address the major pain points of the recent collapses,” David Wells, CEO of digital asset trading platform Enclave Markets, told Cointelegraph.

Recent: What crypto hodlers should keep in mind as tax season approaches

More needs to be done to maintain institutional momentum, the executive stated. “To really attract institutional flow, crypto markets will need to build more sophisticated products that allow for proper hedging and risk management,” added Wells. He’s optimistic providers will rise to the challenge, however.

It appears that inflation may have peaked, and many expect the U.S. Fed and perhaps other central banks to slow the pace at which they tighten interest rates, said Kuiper. While that does not necessarily portend rising risk-asset prices, “institutions and other asset allocators in the longer-term may once again turn to Bitcoin if central banks ease aggressively as they have done in the past,” he concluded.

What is institutional DeFi, and how can banks benefit?

Institutional DeFi could be a new paradigm that banks can leverage for product innovation, new pricing models and operational efficiencies.

Financial services institutions and banks have increasingly engaged with Web3 since 2020. This is also true within institutional decentralized finance (DeFi), as several potential use cases have emerged that could trigger a new wave of innovation within these organizations. 

Institutional DeFi does not refer to growing institutional investments in DeFi protocols and decentralized applications (DApps) but rather to large institutions using DeFi protocols to tokenize real-world assets with regulatory compliance and institutional-level controls for consumer protection. A common question that comes up is: What benefits does DeFi offer on top of digital banking?

Not long ago, banking was a physical effort where transactions were paper-based and interactions took place through a network of banks. Digitization added efficiencies by automating services and reducing the burden on bank branches. Fintech-led innovation enabled seamless customer interactions with very few physical touchpoints.

The digitization of banks still meant that information was distributed, creating reconciliation overheads. While transactions were executed over digital networks, bookkeeping still had to be performed separately. DeFi would bring the execution of transactions and bookkeeping onto the same network. That’s the advantage that DeFi provides over plain vanilla digitization.

While banks understand the opportunities that lay ahead with institutional DeFi, there are several hurdles to overcome before benefits can be realized at scale. 

In 2019 alone, banks spent over $270 Billion per year to comply with regulatory obligations toward offering mainstream financial services. Banks and financial services firms must collaborate with regulators and will need to get several controls in place to tap into institutional DeFi.

Regulatory compliance for institutional DeFi

Banks go through high levels of rigor before offering their products and services to consumers. They are checked for viability through stress scenarios, but more importantly, are also checked for conduct issues. For instance, lending products are scrutinized for mis-selling to customers if the interest rates are very high.

In the DeFi world today, there are products that wouldn’t survive banks’ usual degree of due diligence. Several DeFi platforms offer three and four-digit annual percentage yields to their liquidity providers, which is unheard of in mainstream financial services.

The DeFi world also suffers from a lack of corporate governance. The tokenized world hands over governance to its tokenholders. While most DeFi ecosystems have high degrees of centralization through uneven token ownership, they still often lack sufficient corporate governance.

Recent: How time-weighted average price can reduce the market impact of large trades

The other key focus area for regulatory compliance is when products are launched on-chain. In today’s environment, a bond’s issuance goes through regulatory approvals depending on the bond’s structure. But if the bond issuance is done on DeFi, there is no regulatory framework to rely on or control the process.

Banks must work with each other and with regulators to drive product innovation and regulatory frameworks around native institutional DeFi products.

Legal framework for smart contracts

Smart contracts are a critical aspect of DeFi. They offer the ability to programmatically trigger and settle transactions. However, they are still a nascent technology, and the legal enforceability of a transaction triggered by a smart contract is unclear in many jurisdictions and situations.

There are pockets of guidelines from various regulatory and legal bodies across the world. For instance, the state of Nevada in the United States has made smart contracts legally enforceable, but there needs to be a broader legal framework that nation states sign up to so that financial services that rely on programmable money can have robust legal foundations.

Data privacy

DeFi applications have not only taken pride in but also have relied upon the transparency of on-chain transactions. The broader ecosystem has used this feature effectively in understanding market behaviors. For instance, whale activity is regularly tracked by applications to assess market sentiment.

Models like automated market making (AMM) have emerged within DeFi thanks to on-chain transparency. DeFi protocols are able to calculate asset prices based on real-time supply and demand data. Institutional DeFi looks to draw inspiration from these models.

Yet, conventional capital market participants rely on the privacy of transactions. Brokers have acted as proxies for institutions that look to place large market orders. While the market sees large transactions happening, it is not possible for them to spot the institution that is behind the transaction.

Institutional DeFi would need to find a good middle ground between the transparent DeFi world and traditional capital markets that are intermediated to create privacy. In the past, banks have tested DeFi using permissioned blockchains that allowed only certain participants to use the chain.

In recent times, however, institutional participants have been more open to try out permissionless blockchains like JPMorgan’s collaboration with Polygon. However, it remains to be seen how they will achieve the required level of privacy of transactions while providing the algorithms with on-chain information for AMM to happen effectively.

AML/KYC controls

Last but not least, banks and financial services firms rely on robust Anti-Money Laundering (AML) and Know Your Customer (KYC) controls. Some 10%-15% of the workforce in banks ensure that compliance and risk standards can meet regulatory rigor.

On the other side of the spectrum, a recent Chainalysis report highlighted that as of early 2022, nearly $10 billion worth of cryptocurrencies were held by illicit addresses. According to the report, nearly $8.6 billion worth of cryptocurrencies were laundered by cybercriminals in 2021.

Again, there is a middle ground that needs to be identified where institutional DeFi participants identify themselves through robust KYC processes. In order to use DeFi services offered by institutions, users must also adhere to any AML controls and on-chain analytics that are mandated by the institutions.

Other considerations

This is not an exhaustive list of capabilities that institutions must have in place to explore DeFi effectively. There are other aspects such as aligning standards across banks, jurisdictions and asset classes. Institutional DeFi can only work if many institutions come to the table in a planned fashion.

Self-custody wallets with very little friction should be in place. For institutional DeFi to go mainstream, user experiences must be seamless. Wallets like ZenGo already onboard users without the need to use private keys. This should be the norm for institutional DeFi to go mainstream.

Recent: Web3 projects aim to create engagement between fans and sports leagues

On-chain and off-chain interoperability must be in place as the onboarding of institutions to the global banking infrastructure could potentially take decades. Banks must also be open to dialogues when they use different chains and cryptographic technologies that need to talk to each other in order to achieve an integrated market infrastructure.

The next couple of decades is going to be fascinating as controlled, regulated and intermediated capital markets look to tap into the DeFi “wild west.” How banks and financial institutions work together and with regulators globally will decide whether institutional DeFi can be the utopian middle ground that brings together the best of both worlds.

What is institutional DeFi and how can banks benefit?

Institutional DeFi could be a new paradigm that banks can leverage for product innovation, new pricing models and operational efficiencies.

Financial services institutions and banks have increasingly engaged with Web3 since 2020. This is also true within institutional decentralized finance (DeFi), as several potential use cases have emerged that could trigger a new wave of innovation within these organizations. 

Institutional DeFi does not refer to growing institutional investments in DeFi protocols and decentralized applications (DApps) but rather to large institutions using DeFi protocols to tokenize real-world assets with regulatory compliance and institutional-level controls for consumer protection. A common question that comes up is: What benefits does DeFi offer on top of digital banking?

Not long ago, banking was a physical effort where transactions were paper-based and interactions took place through a network of banks. Digitization added efficiencies by automating services and reducing the burden on bank branches. Fintech-led innovation enabled seamless customer interactions with very few physical touchpoints.

The digitization of banks still meant that information was distributed, creating reconciliation overheads. While transactions were executed over digital networks, bookkeeping still had to be performed separately. DeFi would bring the execution of transactions and bookkeeping onto the same network. That’s the advantage that DeFi provides over plain vanilla digitization.

While banks understand the opportunities that lay ahead with institutional DeFi, there are several hurdles to overcome before benefits can be realized at scale. 

In 2019 alone, banks spent over $270 Billion per year to comply with regulatory obligations toward offering mainstream financial services. Banks and financial services firms must collaborate with regulators and will need to get several controls in place to tap into institutional DeFi.

Regulatory compliance for institutional DeFi

Banks go through high levels of rigor before offering their products and services to consumers. They are checked for viability through stress scenarios, but more importantly, are also checked for conduct issues. For instance, lending products are scrutinized for mis-selling to customers if the interest rates are very high.

In the DeFi world today, there are products that wouldn’t survive banks’ usual degree of due diligence. Several DeFi platforms offer three and four-digit annual percentage yields to their liquidity providers, which is unheard of in mainstream financial services.

The DeFi world also suffers from a lack of corporate governance. The tokenized world hands over governance to its tokenholders. While most DeFi ecosystems have high degrees of centralization through uneven token ownership, they still often lack sufficient corporate governance.

Recent: How time-weighted average price can reduce the market impact of large trades

The other key focus area for regulatory compliance is when products are launched on-chain. In today’s environment, a bond’s issuance goes through regulatory approvals depending on the bond’s structure. But if the bond issuance is done on DeFi, there is no regulatory framework to rely on or control the process.

Banks must work with each other and with regulators to drive product innovation and regulatory frameworks around native institutional DeFi products.

Legal framework for smart contracts

Smart contracts are a critical aspect of DeFi. They offer the ability to programmatically trigger and settle transactions. However, they are still a nascent technology, and the legal enforceability of a transaction triggered by a smart contract is unclear in many jurisdictions and situations.

There are pockets of guidelines from various regulatory and legal bodies across the world. For instance, the state of Nevada in the United States has made smart contracts legally enforceable, but there needs to be a broader legal framework that nation states sign up to so that financial services that rely on programmable money can have robust legal foundations.

Data privacy

DeFi applications have not only taken pride in but also have relied upon the transparency of on-chain transactions. The broader ecosystem has used this feature effectively in understanding market behaviors. For instance, whale activity is regularly tracked by applications to assess market sentiment.

Models like automated market making (AMM) have emerged within DeFi thanks to on-chain transparency. DeFi protocols are able to calculate asset prices based on real-time supply and demand data. Institutional DeFi looks to draw inspiration from these models.

Yet, conventional capital market participants rely on the privacy of transactions. Brokers have acted as proxies for institutions that look to place large market orders. While the market sees large transactions happening, it is not possible for them to spot the institution that is behind the transaction.

Institutional DeFi would need to find a good middle ground between the transparent DeFi world and traditional capital markets that are intermediated to create privacy. In the past, banks have tested DeFi using permissioned blockchains that allowed only certain participants to use the chain.

In recent times, however, institutional participants have been more open to try out permissionless blockchains like JPMorgan’s collaboration with Polygon. However, it remains to be seen how they will achieve the required level of privacy of transactions while providing the algorithms with on-chain information for AMM to happen effectively.

AML/KYC controls

Last but not least, banks and financial services firms rely on robust Anti-Money Laundering (AML) and Know Your Customer (KYC) controls. Some 10%-15% of the workforce in banks ensure that compliance and risk standards can meet regulatory rigor.

On the other side of the spectrum, a recent Chainalysis report highlighted that as of early 2022, nearly $10 billion worth of cryptocurrencies were held by illicit addresses. According to the report, nearly $8.6 billion worth of cryptocurrencies were laundered by cybercriminals in 2021.

Again, there is a middle ground that needs to be identified where institutional DeFi participants identify themselves through robust KYC processes. In order to use DeFi services offered by institutions, users must also adhere to any AML controls and on-chain analytics that are mandated by the institutions.

Other considerations

This is not an exhaustive list of capabilities that institutions must have in place to explore DeFi effectively. There are other aspects such as aligning standards across banks, jurisdictions and asset classes. Institutional DeFi can only work if many institutions come to the table in a planned fashion.

Self-custody wallets with very little friction should be in place. For institutional DeFi to go mainstream, user experiences must be seamless. Wallets like ZenGo already onboard users without the need to use private keys. This should be the norm for institutional DeFi to go mainstream.

Recent: Web3 projects aim to create engagement between fans and sports leagues

On-chain and off-chain interoperability must be in place as the onboarding of institutions to the global banking infrastructure could potentially take decades. Banks must also be open to dialogues when they use different chains and cryptographic technologies that need to talk to each other in order to achieve an integrated market infrastructure.

The next couple of decades is going to be fascinating as controlled, regulated and intermediated capital markets look to tap into the DeFi “wild west.” How banks and financial institutions work together and with regulators globally will decide whether institutional DeFi can be the utopian middle ground that brings together the best of both worlds.

Elon Musk alleges SBF donated over $1B to Democrats: “Where did it go?”

SBF made the “highest ROI trade of all time” by donating $40 million to the right people for getting away with stealing over $10 billion, said Will Manidis, the CEO of ScienceIO.

The attempts of mainstream media to water down the frauds committed by FTX CEO Sam Bankman-Fried (SBF) did not fare well in convincing the crypto community and entrepreneurs. Instead, the misinformation campaign collided with Tesla CEO Elon Musk’s drive to position Twitter as “the most accurate source of information.”

The world is yet to overcome the shock after witnessing the legal leniency awarded to SBF for misappropriating users’ funds and shady investment practices via trading firms Alameda Research and FTX. Will Manidis, the CEO of ScienceIO, a healthcare data platform, pointed out that SBF made the “highest ROI trade of all time” by donating $40 million to the right people for getting away with stealing over $10 billion.

On the other hand, Musk alleged that SBF donated over $1 billion to Democratic candidates, which is way more than the publicly disclosed amount of $40 million. SBF previously admitted to making backdoor donations to the Democratic Party. Musk asked:

“His actual support of Dem elections is probably over $1B. The money went somewhere, so where did it go?”

The United States House Financial Services Committee chair Maxine Waters, a Democrat, and ranking member Patrick McHenry, a Republican, have requested SBF to appear in an investigative hearing scheduled for Dec. 13.

To this request, prominent entrepreneurs, including Polygon CEO Ryan Wyatt, informed Waters that “he’s (SBF) a criminal” after being shocked at the leniency shown by the people in power to the fugitive.

Related: FTX collapse drives curiosity around Sam Bankman-Fried, Google data shows

The crypto community openly criticizes paid narratives that try to show SBF in good light. The latest backlash is related to SBF’s interviews in New York Times DealBook Summit and Good Morning America interviews.

Speaking to the news outlets during the ‘apology tour,’ SBF portrayed himself as a victim and got applauded at the end. “Watching SBF’s interview is kind of like watching Casey Anthony’s documentary. They’re so mechanical, they’re so inauthentic in their delivery. If you feel any emotion, at all, it slows people down. The way it is expressed is a separate subjective matter,” said Twitter user and developer Naom.

Elon Musk alleges SBF donated over $1B to Democrats: ‘Where did it go?’

Some online are floating around theories that SBF will get away with misappropriating and losing user funds because of his large donations to politicians.

Many in the crypto space have accused mainstream media of intentionally trying to water down the actions of FTX CEO Sam “SBF” Bankman-Fried, including Tesla CEO Elon Musk, who is on a self-proclaimed mission to position Twitter as “the most accurate source of information.”

While the world still overcomes the shock of FTX’s collapse and the realization that SBF had been misappropriating users’ funds and engaging in shady investment practices via its sister trading firm, Will Manidis, CEO of ScienceIO — a healthcare data platform — tweeted that SBF made one of the “highest ROI trades of all time” by donating $40 million to the right politicians, who he claims have allowed him to get away with stealing over $10 billion.

Musk responded to the tweet, alleging that the amount of money SBF actually donated to Democratic candidates was over $1 billion, which would be way more than the publicly disclosed amount of $40 million. SBF previously admitted to making “dark” donations to the Republican Party. Musk asked:

“His actual support of Dem elections is probably over $1B. The money went somewhere, so where did it go?”

Meanwhile, United States House Financial Services Committee Chair Maxine Waters, a Democrat, and ranking member Patrick McHenry, a Republican, have requested that SBF appear in an investigative hearing scheduled for Dec. 13.

Polygon CEO Ryan Wyatt responded to Waters’ request by stating that “he’s [SBF] a criminal. What is happening.”

Related: FTX collapse drives curiosity around Sam Bankman-Fried, Google data shows

This latest round of backlash against SBF comes shortly after he gave interviews during The New York Times‘ DealBook Summit and to Good Morning America.

During his so-called “apology tour,” SBF has been portraying himself as a victim and even received a round of applause at the end of his DealBook Summit appearance. According to Twitter user and developer Naomi, “Watching SBF’s interview is kind of like watching Casey Anthony’s documentary. They’re so mechanical, they’re so inauthentic in their delivery. If you feel any emotion, at all, it slows people down. The way it is expressed is a separate subjective matter.”

Update (Dec. 5, 10:10 pm UTC): This article previously stated that Bankman-Fried admitted to giving backdoor donations to the Democratic Party. It has been updated to reflect that his dark donations went to the Republican Party.

Crypto Twitter unhappy with SBF ‘puff piece’ pushed by mainstream media

While SBF refuses to interact with Crypto Twitter, he was featured in New York Times trying to explain the sequence of events that led to the fall of FTX.

When the world realized that Sam “SBF” Bankman-Fried had seemingly committed fraud when building his FTX empire, fellow entrepreneurs, investors and long-time believers unanimously acknowledged the damage caused to the credibility of the crypto ecosystem. On the other hand, some mainstream media outlets — which have predominantly attacked crypto via negative speculations — have seemingly taken sides with SBF while paying little to no heed to the losses exceeding billions of dollars incurred by the general public.

While SBF refuses to interact with Crypto Twitter, the same community he once called home, he was featured in a New York Times article on Nov. 14 in which he tries to explain the sequence of events that led to the fall of the crypto exchange FTX. However, the article’s tone did not resonate with many in the crypto community, with some accusing the NYT of being biased given SBF’s strong ties with United States politics.

As pointed out by Bloomberg journalist Trung Phan, the “puff piece on SBF” fails to mention the potential fraud and crimes committed by the entrepreneur. Instead, the NYT chose to report an angle no one expected.

Several crypto entrepreneurs — including Polygon Studios CEO Ryan Wyatt, angel investor Balaji Srinivasan and billionaire Elon Musk — openly criticized the NYT, saying it was trying to change the narrative. Wyatt tweeted at the author of the article, stating that SBF committed significant financial crimes, adding:

“It’s just a disservice to all of those impacted, and it’s disheartening to see all of this just skimmed over like he made a simple mistake.”

Srinivasan accused the New York Times of covering up the crimes committed by Sam Bankman-Fried. “Nothing SBF says can be trusted. Nothing NYT says can be trusted either,” said Srinivasan while asking Crypto Twitter to mass block the media outlet for allegedly spreading disinformation.

Musk, the talk of the town, also shared the same feelings, asking a simple question on his recently purchased social media platform:

“Why the puff piece @nytimes?”

At a time when entrepreneurs are trying to remediate the destruction caused to the crypto ecosystem, the community is keeping a close eye on what mainstream media reports. It is important to note that other mainstream media outlets — such as CNBC, The Financial Times and The Wall Street Journal — have had more balanced reporting on the actions of SBF and their significant harm.

Related: FTX collapse could see crypto sector layoffs accelerate

In a recent ask-me-anything (AMA) session conducted on Nov. 14, Binance CEO Changpeng Zhao asked investors to take responsibility for their investment decisions instead of purely blaming bad actors like FTX.

“As a user, you also have responsibility — you can’t just blame all of the responsibility to other people. When bad things happen, if you blame all of the responsibility, if it’s always to other people, you will never be successful,” CZ explained.

Vitalik Buterin ‘kinda happy’ with ETF delays, backs maturity over attention

Sharing his opinion around crypto regulations, Buterin spoke against the regulations that have an impact on the inner workings of a crypto ecosystem.

The co-founder of Ethereum, Vitalik Buterin, believes that the crypto ecosystem needs to mature and be in tune with the regulatory policies that allow crypto projects to operate internally freely.

Sharing his opinion around crypto regulations, Buterin spoke against the regulations that have an impact on the inner workings of a crypto ecosystem.

Considering the current circumstances, he believed it was better to have regulations that allow inner independence to crypto projects, even if it hampers mainstream adoption. Buterin opined:

“I’m actually kinda happy a lot of the exchange-traded funds (ETFs) are getting delayed. The ecosystem needs time to mature before we get even more attention.”

The use of Know Your Customer (KYC) on decentralized finance (DeFi) frontends was another concern pointed out by Buterin. However, he highlighted the need for KYC on crypto exchanges, which has seen wide-scale implementations. According to the entrepreneur:

“It (KYC on DeFi frontends) would annoy users but do nothing against hackers. Hackers write custom code to interact with contracts already.”

In this regard, Buterin made three recommendations, as shown below.

On an end note, Buterin recommended using zero-knowledge proofs to meet regulatory requirements while preserving users’ privacy, stating that “I would love to see rules written in such a way that requirements can be satisfied by zero knowledge proofs as much as possible.”

Related: The Merge brings down Ethereum’s network power consumption by over 99.9%

Google recently added a search feature that allows users to view Ether (ETH) wallet balances by searching their addresses.

Acknowledging the recent Ethereum Merge upgrade, Google embedded a countdown ticker dedicated to Ethereum’s transition from proof-of-work (PoW) to proof-of-stake (PoS) consensus mechanism.

MetaMask adopts custodial features for NFT-hungry institutional investors

The MetaMask Institutional wallet added Cobo NFT management to its growing list of custodial services for institutional investors.

Institutional investment is pouring into the crypto world, notably the nonfungible token (NFT) scene. In a reaction to the influx, MetaMask Institutional announced another addition to its custodial services offerings for institutional-level clients.

MetaMask’s partnership with NFT management and storage service Cobo aims to create a “one-stop platform” for large corporations dealing with digital assets.

Although MetaMask is a non-custodial wallet at its average user level, the institutional branch of the wallet has been adopting custodial partnerships in various countries around the world.

Tavia Wong, the director of marketing and business development for Cobo, told Cointelegraph that not only does custodianship provide asset protection, but for institutions specifically, custodianship becomes useful on an administrative level.

“Because of the high levels of users and different clearance levels, institutions require additional features to avoid internal failures and the consequences of negligence.”

While wallets like MetaMask have been deemed not as “user friendly” in the past, this addition to custodial offerings prioritizes usability for big investors.

Related: Institutional crypto custody: How banks are housing digital assets

The new integration allows institutional clients to designate roles  the company alongside internal collaboration tools. According to Wong, this enables user limits on buying, trading and selling as permitted by the administrator.

“With multisig access, it ensures that no single entity will be able to control all assets, removing any single point of failure.”

Nonetheless, the debate between noncustodial and custodial wallets still rages on.

With many in the space touting the slogan “not your keys; not your coins,” noncustodial wallets are often looked to for more security and financial autonomy.

However, as mainstream users without atechnical backgrounds continue to enter the space, custodial wallets often offer a more user-friendly environment. Some users even refute the aforementioned slogan in favor of greater accessibility for easy adoption:

Traditional financial giants like Société Générale, one of the largest investment banks in Europe, recently opened up crypto asset management services to provide its clients with an easy on-ramp.

Nasdaq also announced on Sept. 20 that it will offer crypto custodial services.

Blockchain tech driving institutional-grade solutions: Blockchain Expo Europe

Blockchain Expo Europe 2022 in Amsterdam highlights meaningful strides in enterprise-grade blockchain solutions driven by mainstream institutions.

Blockchain is no longer a buzzword being thrown around by mainstream institutions as meaningful and fully-working pilots and programs come to the fore at Blockchain Expo Europe 2022 in Amsterdam.

Before the COVID-19 pandemic, a number of mainstream companies from various industries started to explore ways blockchain technology could be used to improve processes and products.

After two years of social distancing and working from home, the time to harvest the fruits of sewn seeds has arrived, as evidenced by some intriguing updates from major corporations utilizing blockchain technology.

The world of business consulting, healthcare and pharmaceuticals and the energy sector are all delivering working, blockchain-powered solutions that have seemingly proved the broad spectrum of utility promised by the burgeoning technology.

Cointelegraph was on the ground for the event and managed to touch base with a number of speakers who showcased how their firms were using the technology to drive innovation.

EY, the global business consulting firm, has been working hard to build enterprise-grade blockchain capabilities over the past three years. Federico De Poli, who heads up the global development of the EY OpsChain functionality, outlined how the firm had spent over $100 million over the past three years building a fulling working product solution.

Federico de Poli at Blockchain Expo Amsterdam.

Driving enterprise adoption has been key, helping clients navigate a new environment, building privacy tools focused on safety and helping companies run business processes on the Ethereum blockchain.

As De Poli explained, the company’s proprietary EY Opschain and EY Blockchain Analyzer are two main tools using blockchain technology:

“Opschain products is our business suite of products. We have traceability which is our most used tool which is being used in production by several clients in different industries. We have a contract manager which is being used in a first trial — it’s a tool which helps us do digital contracting between parties.”

EY’s public finance manager also allows governments to track the expenditure of funds, proving the widespread useability of blockchain solutions.

Healthcare and pharmaceutical firms also attended the RAI Amsterdam Convention center. Alex Popa, associate director of Blockchain for Pharma Supply Excellence, MSD (Merck), outlined a pilot that was aimed at addressing problems with multifaceted healthcare networks.

Alex Popa at Blockchain Expo Amsterdam.

Plagued by expensive, inefficient and vulnerable systems, blockchain technology provides practical solutions to these problems. MSD has operated a pilot to combat a vexing industry issue and counterfeit drugs using Hyperledger Fabric, which allowed patients in Hong Kong to verify medicines’ authenticity from their source.

Jessica Lee, head of Blockchain for Johnson & Johnson’s Janssen Commercial North America, also showcased a piloted use case for a value-based healthcare system to share data privately, securely and transparently using blockchain technology.

Sabine Brink, blockchain lead at Shell, gave a compelling presentation focused on digital innovation in the energy sector. A key takeaway was the growing use of blockchain technology to drive transparency in energy.

Sabine Brink at Blockchain Expo Amsterdam.

The firm is engaged in several blockchain-powered projects deployed on public blockchains to address a long-standing propensity for the energy sector to work in silos. A key highlight was Shell’s work supporting Avelia, a sustainable, blockchain-powered aviation fuel tracing aimed at decarbonizing air travel.

Outlining that 90 percent of airline emissions are attributable to business travel, Avelia acts as sustainability as a service product for corporate flyers and airlines to book and claim sustainable aviation fuel:

“Energy is becoming distributed and decentralized, and it‘s hard to imagine it’s being orchestrated in a centralized way. There is no other way to get it done on a global scale, and blockchain has a huge role.”

Conversations with conference delegates and speakers highlighted the apparent strides made in developing working blockchain solutions across industries. The technology has driven innovation across industries, and mainstream companies are doing their part to drive new use cases and solutions for blockchain-based systems.

Hong Kong positioned as the most crypto-ready country in 2022

Factors considered to calculate a country’s readiness were the number of crypto ATMs proportional to the population and geographical size and the number of blockchain startups per 100,00 people.

While public acceptance remains key to crypto’s existence, the road to mainstream crypto adoption requires governments to set up a supporting infrastructure that complements the requirements of the technology and the people. 

Factors such as crypto ATM installations, pro-crypto regulations, startup culture and a fair tax regime signal a country’s readiness to adopt cryptocurrencies. Considering these factors, a Forex Suggest study revealed Hong Kong’s position as the best-prepared country for widespread cryptocurrency adoption, with a crypto-readiness score of 8.6. Despite having a bigger crypto infrastructure than the island nation, the United States and Switzerland made it to the top three with lower crypto-readiness scores of 7.7 and 7.5, respectively, as shown below.

The biggest factors considered in the study to calculate a country’s readiness were the number of crypto ATM installations proportional to the population and geographical size of the jurisdiction and the number of blockchain startups per 100,00 people. As a result, Hong Kong’s smaller land mass helped the country top the list. 

CoinATMRadar data shows that the U.S. houses 88% of the global crypto ATM installations. On the contrary, Hong Kong installed a network of 146 crypto ATMs, representing just 0.4% of crypto ATMs worldwide. Owing to the smaller area, Hong Kong residents are never more than 4.3 miles (7 kilometers) away from a crypto ATM.

On the other hand, Switzerland has a crypto ATM every 161.5 miles (260 km), while the U.S. has installed crypto ATMs every 168.3 miles (271 km). 

Crypto taxes serve as the biggest deterrents to mainstream crypto adoption. Hong Kong, Switzerland, Panama, Portugal, Germany, Malaysia and Turkey share the top spot for the lowest crypto taxes on capital gains.

A country’s efforts to nurture a growing crypto infrastructure depend heavily on investor sentiment. That being said, investors from major economies like Australia, Ireland and the United Kingdom have shown the highest interest in cryptocurrencies, signaling healthy pro-crypto competition around the globe. 

Related: Opera Crypto Browser integrates Coin98 to bolster Web3 accessibility in Southeast Asia

Opera Crypto Browser doubled down on its effort to improve Web3 accessibility by announcing a partnership with Coin98, a Southeast Asia-based decentralized finance (DeFi) platform, to bolster Web3 accessibility.

By integrating Coin98, Opera’s Crypto Browser will be able to tap into the platform’s range of multichain nonfungible tokens (NFTs), decentralized exchanges (DEX), cross-chain bridges and asset swaps, as well as the ability to stake and lend their cryptocurrency portfolios, as per a Thursday announcement.