Market Update & Industry News - Week ending 13 September

🔷 Coinbase launched a Wrapped Bitcoin (cbBTC), which is a token backed 1:1 by Bitcoin (BTC) and built on Ethereum as an ERC20 token. The product allows users to access BTC’s value while interacting with Ethereum-based decentralised applications (dApps) and DeFi platforms.

Appold view: Coinbase was not the first to launch this but the most high-profile. It is conceptually great, but there are market concerns about Coinbase's centralised control and holding all of the counterparty risks. There could be redemption issues if Coinbase ran into operational or legal issues.

🔷 The UK Financial Conduct Authority (FCA) has charged an individual for operating unregistered crypto ATMs that processed £2.6 million. This is the FCA’s first prosecution for such activity, citing concerns over money laundering and warning users about the risks of unregulated digital assets.

Appold view: These machines operated between October 2020 to January 2022. This action demonstrates a broader regulatory crackdown on the crypto sector, which could have lasting implications for operators and investors alike. The individual will also face criminal charges related to violations of money laundering regulations, the Forgery and Counterfeiting Act and the Proceeds of Crime Act.

🔷 The UK Government introduced a new bill in Parliament to clarify the legal status of digital assets. The proposed legislation seeks to define how digital assets will be treated under UK law, specifically addressing personal property rights. The move is designed to improve legal protection for holders of digital assets.

Appold view: The timeline to becoming law can vary for a Bill like this, titled “The Property (Digital Assets etc’) Bill”. It has been introduced under special Law Commission of England and Wales procedures and could take 6-12 months to become law once it has passed through both houses of government and received Royal Assent. Appold expects many revisions before then.

🔷 Trading platform, eToro, settled with the U.S. Securities and Exchange Commission (SEC) and will shut down nearly all cryptocurrency trading for U.S. customers. As part of the settlement, eToro will pay a $1.5 million fine for operating as an unregistered brokerage and clearing agency.

Appold view: The fine is against their US entity and at $1.5 million, may not seem large for a company of eToro's size, but it sends a strong ongoing message to other firms operating in such a manner.

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