7-Day Market Moves

Tuesday morning greeted Bitcoin with a slip below the $28,000 mark, as it faced a 1.76% drop over the past week. The rise of the Ordinal protocol and Bitcoin-based meme-coins led to increased transaction fees and network congestion. Meanwhile, Ethereum (ETH) also experienced a decline but managed to hold onto a weekly gain of 0.50%.

Data from Coinmarketcap revealed that the total crypto market capitalization took a 3.26% hit in the past 24 hours, settling at $1.14 trillion. On the flip side, the total trading volume saw a significant 56.84% increase, reaching $45.38 billion.

In terms of macro factors, keep an eye on the upcoming April U.S. CPI report, which is projected to show a 5% annual inflation rate and a .4% monthly increase, according to Dow Jones. Additionally, the Federal Reserve will convene on June 14 to determine interest rates. As it stands, there's an 85.7% chance that rates will remain unchanged at 5% to 5.25%, with a 14.3% chance of a 25 basis-point rate hike.

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Crypto Custody Chaos: SEC's New Rules Face a Fierce Fintech Fightback

TL: DR

• SEC suggests stricter regulations for crypto custody.
• Blockchain Association and Andreessen Horowitz oppose the proposal.
• Opponents argue it could stifle investment and breach advisers' duty of care.
• Proposed rules include tighter asset segregation and annual audits.
• SEC Commissioner Hester Pierce raises concerns about the rule's workability and focus.

The US Securities and Exchange Commission (SEC) recently proposed more stringent rules surrounding crypto custody, but the Blockchain Association and venture capital firm Andreessen Horowitz (a16z) are pushing back. Both organizations submitted letters in opposition to the proposal, arguing that it could hinder investment in digital assets and breach the duty of care required of investment advisers.

The yet-to-be-approved proposal seeks to enforce stricter regulations on investment advisers' custody of assets, including cryptocurrencies. This would involve tighter asset segregation and mandatory annual audits by public accountants. SEC Commissioner Hester Pierce has also expressed doubts about the rule's workability and its focus on crypto-related companies.

In other news,

• Bittrex's U.S. files for bankruptcy following closure and SEC lawsuit. Read more.
• Ordinal inscriptions skyrocket to 4.8M, doubles in record time of a week. Read more.
• SBF fights back, demands indictment charges be tossed. Read more.

Iflytek's "Spark Model" is China's Answer to ChatGPT

TL: DR

• Chinese AI company Iflytek unveils its ChatGPT competitor, "Spark Model."
• Founder Liu Qingfeng calls it the "dawn of general artificial intelligence."
• Spark Model's capabilities are touted as far ahead of existing systems in China.
• Comparisons with ChatGPT are hindered by China's ban and limited access to Chinese languages/culture.
• Iflytek's progress is remarkable, given only six months of development compared to OpenAI's years of work.

China's AI company Iflytek has launched "Spark Model," an AI system aimed at rivalling OpenAI's ChatGPT. The unveiling event, dubbed "Spark Desk," highlighted the system's potential, with Iflytek founder Liu Qingfeng hailing it as the "dawn of general artificial intelligence."

Although information about the technology behind Spark Model remains sparse, Liu claims its capabilities surpass any existing system in China. Comparing it to ChatGPT is challenging due to the latter's ban in China and OpenAI's limited exposure to Chinese languages and culture. If Spark Model does outshine ChatGPT, it would be a noteworthy accomplishment, considering Iflytek's development began only six months ago, while OpenAI has been refining GPT products since 2015.

In other news,

• Warren Buffet likens AI to atomic bomb. Read more.

Paxful Powers Through Co-Founder Drama

TL: DR

• Paxful shut down for over a month due to customer funds safety concerns.
• Shutdown caused by lawsuit filed by co-founder Artur Schaback against CEO Ray Youssef and the company.
• Users questioned platform stability and wondered when it would reopen.
• Paxful announced resumption of operations and is back online.
• Exchange currently owned by a custodian, serving as director alongside Schabeck and Youssef.

Peer-to-peer bitcoin exchange Paxful faced a turbulent period recently, shutting down for over a month due to concerns about customer funds' safety. The closure resulted from a lawsuit filed by co-founder Artur Schaback against CEO Ray Youssef and the company over wrongful termination and other issues. The shutdown raised questions about the platform's stability, leaving users uncertain about when the exchange would reopen.

However, Paxful has turned a corner, announcing the resumption of operations and its return online. In a blog post, the company stated, "After a month away, we’re happy to announce that the Paxful marketplace is back online. In early April, we faced a difficult decision to temporarily suspend the marketplace to protect all of our customers and Paxful’s future."

A custodian now owns Paxful, serving as a director alongside Schabeck and Youssef. Schabeck explains that the custodian's role is to break ties and prevent deadlocks between the co-founders. During the suspension, the Paxful Wallet remained fully operational for users, who were also offered alternative peer-to-peer platforms for continued trading.

In other news,

• OKX plans to open an office in Turkey. Read more.
• What ban? Chinese citizens are actively trading cryptocurrencies on Binance and FTX. Read more.
• Binance resumes Bitcoin withdrawals after second pause, says it's adjusting fees and integrating lightning network. Read more.

From Swiss Francs to Satoshi, Liechtenstein Explores Bitcoin for Government Payments

TL: DR

• Liechtenstein plans to accept Bitcoin for government services.
• Payments will be immediately exchanged for Swiss francs.
• EU's MiCA regulation may impact Liechtenstein through EEA membership.
• The implementation timeline remains unspecified.

Liechtenstein is making waves in the crypto world. The European nation is planning to accept Bitcoin for government services, according to a report by German news outlet Handelsblatt. Prime Minister Daniel Risch revealed that crypto received as payment will likely be immediately swapped for Swiss francs, Liechtenstein's national currency.

Why does this matter? Well, the European Union is putting the finishing touches on its landmark licensing regime called the Markets in Crypto Assets (MiCA) regulation. This could lure crypto firms seeking some regulatory clarity. And although Liechtenstein isn't part of the EU, it is a member of the larger European Economic Area (EEA), which could extend the framework's relevance.

While the Prime Minister didn't spill the beans on a timeline for adding the crypto payment option, he hinted that the "too risky" label slapped on crypto might change. Sure, it's too volatile for the country's multi-billion dollar annual savings, but as the market stabilizes, the government's stance could shift.

Our take: Liechtenstein's decision to embrace Bitcoin for government services is a significant milestone in cryptocurrency adoption. It also highlights the growing curiosity in digital currencies among governments worldwide. Cheers to that!

In other news,

• Canada joins the CBDC chat. Read more.
• Deloitte integrates blockchain for digital credentials. Read more.
• Cryptocurrencies can be used for debt settlement in China: Supreme Court. Read more.

Pay Your Taxes or Lose Your Crypto: UK Authority's New Proposal

TL: DR

• UK Tax Authority considers confiscating crypto from non-compliant businesses.
• HMRC may gain authority to access custodial digital wallets.
• Part of a broader plan to modernize tax collection process.
• Current DRD legislation doesn't cover digital wallets.
• Government to engage with stakeholders for implementation.
• UK crypto industry awaits solidified regulations, including FSMB.

The UK's Tax Authority is considering regulations to confiscate crypto assets from businesses that fail to fulfil their tax obligations. The government is reviewing proposals to grant HM Revenue & Customs (HMRC) the authority to access custodial digital wallets.

This is part of a broader plan to modernize the tax collection process for non-compliant businesses. The Direct Recovery of Debts (DRD) legislation currently does not extend to digital wallets, leaving HMRC unable to enforce tax debt recovery from them.

The government will engage with external stakeholders, such as digital wallet operators, to address concerns and obstacles in implementing the proposal. This development occurs as the UK crypto industry awaits solidified regulations within the next 12 months, including the Financial Services and Markets Bill (FSMB) that will shape future compliance obligations.

In other news,

• Estonia flushes out 800 crypto firms after new laws. Read more.
• US reps plan a series of congressional hearings this month to discuss clear rules for crypto. Read more.
• Nigeria is ready to accept token-backed assets but not crypto. Read more.