Cryptocurrency Market Update: Key Developments in Europe and the U.S.
Date: March 26, 2023
In today’s cryptocurrency landscape, significant developments are unfolding, particularly in Europe and the United States. A recent survey highlights a disparity between investor demand and the services offered by European banks, while the U.S. Senate has moved to repeal a controversial IRS rule concerning decentralized finance (DeFi). Additionally, Hyperliquid has taken action to delist certain trading products amidst allegations of suspicious market activity.
European Banks Struggle to Meet Crypto Demand
A new survey conducted by the crypto investment platform Bitpanda reveals that European banks may be missing the mark in addressing the growing demand for cryptocurrency services. The survey, which included responses from 10,000 retail and business investors across 13 European nations, found that over 40% of business investors currently hold cryptocurrencies, with an additional 18% planning to invest in the near future.
Despite this robust interest, only 19% of the financial institutions surveyed reported strong client demand for crypto products, illustrating a notable gap between actual investor engagement and institutional perception. The survey further noted that while over 80% of these banks acknowledge the importance of crypto, less than one in five are currently offering any crypto-related services. However, there is some optimism as 18% of institutions indicated plans to expand their crypto offerings, particularly around digital asset transfers.
U.S. Senate Repeals IRS DeFi Broker Rule
In a pivotal move, the U.S. Senate has passed a resolution to repeal the Internal Revenue Service’s (IRS) DeFi broker rule, with support from President Donald Trump, who is expected to sign the resolution into law. The Senate voted 70-28 in favor of this repeal, which originally sought to impose reporting requirements on decentralized finance platforms—such as decentralized exchanges—regarding their crypto sales.
Proponents of the repeal argue that the original rule would stifle innovation in the rapidly evolving crypto space by imposing overly burdensome regulations on decentralized platforms. Conversely, critics warn that repealing the rule may open doors for tax evasion, creating a loophole that could potentially undermine governmental revenue collection efforts.
The Senate’s decision comes after a similar resolution was initially passed in the House, reflecting a strong bipartisan agreement on the issue.
Hyperliquid Delists JELLY Token Perpetual Futures
In another significant development, the decentralized exchange Hyperliquid has announced the delisting of perpetual futures associated with the JELLY token. This decision follows the identification of "suspicious market activity" linked to the trading of these instruments. Hyperliquid’s governance body, the Hyper Foundation, stated that it would reimburse the majority of affected users for any potential losses incurred due to this incident.
The controversy began when a trader opened a sizable $6 million short position on the JELLY token and subsequently engaged in price manipulation by artificially inflating JELLY’s price. Concerns were raised about potential liquidity risks for the platform, and if not addressed, the situation could have led to significant losses for Hyperliquid.
Gracy Chen, CEO of cryptocurrency exchange Bitget, criticized Hyperliquid’s management of the situation, suggesting that it risks branding the network as “FTX 2.0,” referencing the fallout from the collapse of another major crypto exchange. The incident has raised questions about Hyperliquid’s governance and framework, spotlighting perceptions of centralization within a system designed to prioritize decentralization.
As the cryptocurrency space continues to evolve, attention remains focused on how institutions respond to burgeoning investor demand and regulatory shifts. Stakeholders in the crypto market will be monitoring these developments for their potential impact on future trading environments and financial regulations.
Share this article:
