🌐 Last Week Highlights

🇪🇺 Good news from Europe this week: the world-famous Blackrock will launch a Bitcoin ETF there. The Czech Republic also finally approved an exemption from capital tax for three-year crypto holders.

🇳🇱 In the Netherlands, Alexey Pertsev, a developer and the co-founder of Tornado Cash, was transferred to house arrest.

🇵🇱 However, the Czech Republic and Norway remain alone as supporters of creating a BTC reserve. This week, the Central Bank of Poland announced that it does not plan to buy bitcoin.

🇮🇳 Bybit will receive permission to operate in India, the largest crypto market in Asia (together with China).

🇯🇵 Bybit, Bitget, MEXC and KuCoin will be banned in Japan. The local regulator (FSA) ordered their applications to be removed from app stores.

🧨 Political memetokens on the rise

🇦🇷 Argentine President Javier Milei recently promoted the Libra token on his Twitter. However, after a quick rug-pull of the project, he quickly deleted his ad and explained that he has nothing to do with it.

🇨🇫 This is already the second such coin supported by the country's president. The first, in addition to the TRUMP token that has lost value, was the CAR coin - it was supported by the President of the Central African Republic (CAR) Faustin-Archange Touadéra. And there was a rug pull there, too.

🙈 Legally, all these coins are in a gray area for now - there are no restrictions on investing in them, but there is no insurance against rug pulls, either. Therefore, I would not recommend buying them.

🇺🇸 However, in my opinion, TRUMP stands apart - so far, its value has fallen significantly from highs more than 5 times, it still looks like having potential for price recovery. But this is a high risk deal.

🇺🇸 Cryptocurrency Market Calm: Reasons

🎲 Last week, the outflow of funds from the Bitcoin ETF, according to Farside Investors, exceeded the inflow by $577.2 million. And only one of the five trading days of the previous week did the inflow exceed the outflow, by $70.6 million on Friday. The price of Bitcoin is $96,000 at the time of writing.

💰 At the same time, the situation with crypto regulation in the world remains good. In the US, Brian Quintenz, a person from the crypto industry, has been appointed head of the CFTC. And 22 American states are in the process of adopting local Bitcoin reserves.

📊 Most likely, the calm in the market is due to the position of monetary regulators - the Fed left the rate unchanged - and the markets are waiting for the adoption of new crypto laws at the federal level. It is still unclear when the Senate will finally pass FIT21, which transfers a significant part of the SEC's powers to the CFTC.

📄 On the one hand, the chairman of the Senate's relevant committee, Tim Scott promised to do this in the first 100 days of Trump's presidential term. On the other hand, the fact that the Senate never started considering the law in the previous convocation may lead to its reconsideration in Congress.

🤯 Although hearings on both FIT21 and the law on regulating stablecoins occur regularly, Republican legislators (they have the majority) have a more important matter to handle - approving all of Trump's new appointments, including the head of the SEC. Without this, it is unlikely that FIT21 can be expected to pass. So a new revival of the crypto market associated with this law is unlikely to occur before April-May of this year

🇪🇺 One of the first MiCA licenses and more freedom for DeFi in the US

🇨🇾 eToro became one of the first companies granted a new type of cryptocurrency license in the EU: the MiCA license.

🇦🇪 Mantra received a license in Dubai. This is a DeFi platform that deals with the tokenization of real world assets (RWA).

🇺🇸 Coinbase, Uniswap, Kraken, and other major US companies have filed a complaint to Congress about IRS requirements. They ask the tax service to lift the obligation for DeFi platforms to hand over information about their users (and their income).

🦅 If the obligation for DeFi companies in the US to hand over data to the IRS is lifted, it will truly be the beginning of a golden age of cryptocurrency in the US.

💰 Hackers stole $1.4 billion from Bybit

🧘 Bybit’s CEO, Ben Zhou hastened to calm clients - hackers got control only of the Ethereum wallet. All other client funds are safe.

✅ Withdrawals work. Checked it myself!

🤬 The Indian exchange WazirX recently experienced the same problem with a $235 million hack. What i can’t understand is how it is possible to store such large amounts of money in hot wallets.

📜 Hacks like those at WazirX and Bybit are why regulators frequently require exchanges to store clients' funds only in cold wallets. For example, both Japan and South Korea have this official requirement.

💸More about the Bybit hack

🧨 The $1.4 billion hack of the Bybit exchange has become February's main headline. 🇰🇵 North Korean hackers, the Lazarus Group are suspected of the attack.

⚫️ They stole more than 400,000 ETH and other coins.

⚫️ The hacking method was social engineering with transaction substitution - that is, when sending funds, the exchange employees did not know what kind of transaction they were making.

⚫️ There was no bank run on Bybit, although many customers (including me), withdrew funds just in case.

⚫️ The exchange has restored its Ethereum reserves. Bybit CEO Ben Zhou has announced a reward of 10% of the stolen funds - $140 million - for recovery of the funds.

🗣 My comment:

🦜 Some (including me) rushed to attack Bybit and declare negligence. In particular, they point to the lack of normal on-chain monitoring, transactions signed blindly.

🙅 This reproach is partly fair, but only partly. Because Bybit is not some kind of garbage dump (as they think in regulated jurisdictions), but one of the largest crypto exchanges in the world. Therefore, this is not just Bybit's mistake, but the Achilles heel of the entire crypto industry.

💬 It's just that the security systems of crypto exchanges and the way storage is arranged on them need to be improved. We will talk more about the Bybit hack, legal aspects, and other hacking cases this week with blockchain developer Alexander Mazaletsky.

🇪🇨 Ecuador: the country of eternal summer

🌫 For now, all crypto transactions in Ecuador are in a gray area. Talks about the need to change the situation began only last year. So far, the country's Central Bank has issued a statement, that recognizes crypto payments as illegal in Ecuador, but allows cryptocurrency transactions for residents.

🏦 There is still no regulation of crypto transactions for businesses or a licensing system for crypto exchanges. At the same time according to a poll provided by local outlet, Ecuador has the biggest demand on crypto - 30% or residents ready to use it for payments.

☀️ I describe all the opportunities for business and digital nomads to move to this welcoming country for foreigners in this article.

🙀 Record outflow from Bitcoin ETF

📉 This week, the price of cryptocurrencies has fallen sharply. Most major cryptocurrencies have shown a decline of 10-20%. The price of Bitcoin fell below $83,000. In the first three days of this week alone, an outflow of more than $2.4 billion was recorded from the Bitcoin ETF.

🇺🇸 The main reason is the fall of the American stock market on expectations of the trade war between the US and the EU and China declared by Trump. And the crypto market has been in a sideways trend for a long time, a correction was brewing.

📊 Nevertheless, new laws on cryptocurrencies that will be adopted in the US this year and other countries around the world are unlikely to allow the market to fall for long. An unexpected rebound is possible even in the coming days.

🔍 Bybit hack: legal aspects and new details

🔦 I summed up the Bybit hack in the article for Hackernoon.

🔭 The community, discussing the details of the hack, was divided into two camps: some say that Bybit themselves are to blame for the hack:
- used a blind signature (“blind signing”).
- stored too much money in one wallet. As the saying goes, “don’t put all your eggs in one basket.”
- used third-party software (Safe) and did not adapt it in any way
- did not change their security system in any way after the Radiant hack in October 2024

🤔 On the other hand, Bybit is not the first (nor will it be the last) major exchange to find itself in such a situation - remember the WazirX hack. One of the factors in the success of Lazarus Group attacks is the vulnerability of the Safe system. And finally, most importantly, Bybit is fighting for the return of the stolen funds and created the Lazarus Bounty project.

💡 This project very clearly demonstrates the main pain point of the crypto industry: hacker attacks. After the Bybit hack, DeFi protocols and centralized exchanges are involved in “money laundering” and cannot (or do not want to?) stop this process.

🤙 Lazarus has transferred the stolen Ether to an increasing number of wallets and is withdrawing funds, primarily exchanging them for Bitcoin. More than 63% of the stolen funds (slightly less than $0.5 billion) were transferred to Bitcoin, which means they will most likely not be returned.

🔙 However, there is a chance to return the remaining funds to Ethereum. Bybit divided companies into good and bad guys - “good actors” and “bad actors”. Good actors respond to requests and block hackers' funds (if they have time). Mantle blocked $41 million in stolen funds.

🔷 So far, this is the biggest success. Other companies are blocking pennies. And this is taking into account that law enforcement agencies and regulators have begun to help Bybit return funds - the FBI and OFAC called on all market participants to block transactions from 51 Lazarus wallets.

❌ But there are also those who do not cooperate with Bybit. So far, the only “bad actor” is eXch.ch, through which Lazarus has laundered $91 million.

🇸🇻 El Salvador is going to sell its Bitcoin reserve?

🔻 Yesterday, the IMF published documentation from its agreement with El Salvador. According to it, the country has committed to ban “public investments” in crypto assets.

❓It is not yet entirely clear whether it consists only new BTC purchases or includes sale of existing reserves as well. However, it’s clear that the IMF loan is more important for El Salvador, than the status of the most crypto-friendly jurisdiction in Latin America.

⤴️ This is one of the few bad news in crypto regulation. The overwhelming majority of regulatory trends point to market growth in the long term - as soon as the US passes all the announced laws, and the global stock market stops shaking due to fears of trade wars.

🇺🇸 Market recovery before crypto summit

🏛 Tomorrow, the White House will host a crypto summit led by crypto czar David Sachs and with the participation of US President Donald Trump. Against this backdrop, the market is showing signs of recovery:
- Bitcoin is again above $90,000
- Yesterday's Bitcoin ETF trading finally showed a small inflow (not outflow) of $22 million.

💰 At the same time, Trump's plans to include not only Bitcoin and Ethereum, but also Solana, Cardano and Ripple in the national cryptocurrency reserve are being discussed.

💢 The inclusion of altcoins in the state reserve is a very controversial initiative. In particular, Solana co-founder Anatoly Yakovenko believes excessive state control over cryptocurrencies will greatly harm decentralization. Yakovenko also notes that the new administration's approach to creating the reserve is still unclear - the criteria by which certain cryptocurrencies are included, as well as the principles upon which the US cryptocurrency reserve will operate.

🖋 Trump signs executive order to create Bitcoin reserve

👁 The executive order was published on the White House website before the crypto summit. So far, it is simply about continuing to store bitcoins previously confiscated by the US government within a “Strategic Bitcoin Reserve” and not selling them.

🫙 A “Digital Asset Stockpile” will be created for other crypto assets. The Department of Commerce and the Treasury have been instructed to prepare their proposals for creating a crypto reserve within 30 days, but in such a way as not to spend additional taxpayer funds.

🎉 We will summarize the results of the week and the crypto summit (which has not yet begun) for you tomorrow.

📅 Weekly Digest

🔻 The crypto summit did not live up to expectations - the market fall continues. Bitcoin - $81,000, Ethereum - $2,000, TON - $2.65.

💬 Although Trump announced the creation of a Bitcoin reserve, Digital Asset Stockpile and the intention to make the United States the crypto capital of the world, he said that no additional purchases of crypto with government funds are planned.

📉 Considering that the Fed does not plan to lower the rate in the near future, all the news rather suggests that no new liquidity injections into crypto are planned in the coming weeks. The total outflow of funds from American Bitcoin ETFs for the week amounted to $739 million. This is not much, but the downtrend prevails.

💹 There is also good news - the American financial regulator (OCC) allowed federal banks (more than 1,000 banks) to conduct operations with crypto. Colombia has begun considering a federal cryptocurrency law, and it is one of the largest crypto markets in LatAm.

🔻 Is the dip near? Or is the second one a gift?

📉 This week, the price of Bitcoin fluctuated between $83,000 and $77,000. The outflow of funds from the Bitcoin ETF continued - more than $700 million in the first two days of the week. Ethereum has lost 7% since Monday and is already firmly below the psychologically important mark of $2,000.

😡 At the same time, negative fundamental factors affecting the market remain - the Fed's rate is not lowered, the US trade war with the EU and Canada continues. Added to this was the risk of a government shutdown in the US (though this happens every year).

🔀 On the other hand, in the event of a further fall in the markets, the Fed and other monetary regulators may turn on the printing press, as former Bitmex CEO Arthur Hayes believes will happen. Moreover, the deeper the crisis, the faster the market will inevitably return to previous highs or even higher, according to Hayes' logic. CryptoQuant analysts also point out that Bitcoin is oversold.

🇺🇸 Will the recession be short?

🗽 American Bitcoin ETFs showed encouraging results for traders on Monday: +$274 million in inflows. The price of TON rose by 4% in a day, to $3.62.

🏦 On Wednesday, the US Federal Reserve will summarize the results of a two-day meeting. The regulator's decisions can affect the prices of assets on the crypto market and, unfortunately, the fall may continue if the Fed does not present plans to reduce interest rates and effective measures to combat the recession. This could continue to drag crypto prices down.

👁 Nevertheless, experts are optimistic about the situation in the medium term. The founder of ARK Invest, Cathie Wood, believes that the US government will use the recession to reduce taxes and the Fed rate. The rates on the Polymarket prediction market indicate the end of quantitative easing by the Fed by May of this year. Also, according to CME Group, the probability of a rate cut by June 2025 is 66%.

↩️ A rate cut by the Fed, combined with the US government's stimulus measures to combat the recession, should support the crypto market, so in the long term, the bottom for Bitcoin is near. However, it is quite likely that the current crypto market decline will continue for the next two months until the Fed starts cutting the rate.

📝 Weekly Crypto Regulation Digest (17-23.03.2025)

🇦🇺 Last week, Australia published a plan to develop cryptocurrency regulation in the country. Large exchanges and custody providers will have to obtain a financial license. Stablecoin regulations are also planned .

🇵🇰 Bilal bin Saqib, the new advisor to Pakistan's Finance Minister, gave an interview to Bloomberg last week. He believes that the legalization of cryptocurrencies will help the country attract investments. He named the USA, Turkey, Nigeria, Singapore and Hong Kong as the countries that Pakistan is looking to as a regulatory model.

🇬🇧 The FCA refused to register Zeux Limited as a crypto provider. In general, obtaining an FCA license for crypto operations in the UK remains a difficult task, possible only for large companies, such as the broker Bitpanda.

🇳🇬 Last week, Nigerian Information Minister, Mohammed Idris commented on the ongoing conflict between the government and Binance. He noted that in Nigeria, there are other companies besides Binance that operate in the crypto space and no charges have been brought against them.

🇺🇸 Last week, the SEC held a roundtable on cryptocurrency regulation - “Spring Sprint Toward Crypto Clarity”. Interim Chair Ueda said that while memecoins and mining are not subject to SEC regulation in the US, it is possible that other types of crypto assets are - this should be the subject of further discussion within the SEC. Pierce noted that the commission plans to give its assessment of NFTs following memecoins.

🇩🇪 Ethena's (USDe) stablecoin license application was declined by German financial regulator BaFin. The stablecoin can no longer be used in the EU.

💎 Bitcoin is falling, TON is growing...

📊 Over the past week, the TON price has shown more than 7% growth - from a weekly minimum of $3.5 to $3.95. And if we take the lowest point for March - $2.39 - then the price growth was 65%. At the same time, the Bitcoin price fell from a monthly maximum of $94,000 to $82,000 at the end of this week. How is this possible?

📈 Probably, the positive news about a billion Telegram users plays a role + the ecosystem has attracted $400 million in investments from American venture funds - Sequoia Capital, Rabbit, Benchmark, Kingsway and others. Rumors about increased TON activity on the US market have been circulating for a long time. Here I will express my assumption: by the end of 2025, we may expect news about an application for TON ETF - one of the easiest ways to declare yourself on the American crypto market.

⏫ However, the growth of the TON price in March may be a short-term phenomenon. Especially if the crypto market continues to fall. This week, the inflow into the American Bitcoin ETF exceeded the outflow by a small amount - just under $200 million. Low volumes may indicate increased volatility and the possibility of a sharp movement in the Bitcoin price, both up and down - depending on the overall situation in the financial markets next week.