China’s awakening to cryptocurrencies?

Block 1: Essential news

• Binance is on all fronts

Everything seems to smile at the cryptocurrency giant. First, Binance has just registered with the Swedish Financial Supervisory Authority (FSA) to continue its regulation in Europe, having done so in seven EU members, including France. Deuxio, Binance.US, the American arm of the platform, has announced the purchase for 1 billion dollars of the assets of the failed Voyager Digital platform, which will allow Voyager customers to recover part of their deposits blocked by the bankruptcy procedure. Thirdly, Binance has announced that it will hire 3,000 people in various positions by 2023.

• The Avalanche blockchain partners with Amazon

It is more precisely the cloud computing platform of the overseas giant, Amazon Web Services (AWS), which has announced that it is a partner of the company Ava Labs, the company that develops the Avalanche blockchain, with the main mission “accelerate the adoption of the blockchain by companies, institutions and governments”. The goal is to bring the entire Avalanche ecosystem (decentralized applications, network nodes, subnets, etc.) directly to AWS. We will see more concretely in the coming months how this partnership will materialize, but this raises questions about a potential gradual centralization of the Avalanche network in the hands of Amazon. The decentralization of networks is a feature dear to the eyes of cryptosphere enthusiasts.

• Polygon’s blockchain partners with Mastercard

Having partnered with renowned companies such as Disney, BMW, Mercedes, Adobe, Adidas and Starbucks, Polygon has partnered with payment giant Mastercard. It was during the Consumer Electronics Show (CES) in Las Vegas that the company announced the launch of an accelerator dedicated to musical artists. So what’s the connection with Polygon? The accelerator will include a limited-edition NFT called “The Mastercard Music Pass” that will give holders access to “exclusive hardware, unique resources, and other physical and virtual experiences.” This collection will be powered by the Polygon blockchain. More concrete details will be given in the coming months. But this demonstrates, once again, Mastercard’s desire to occupy the ground in the cryptocurrency sphere.

Sam Bankman-Fried, the disgraced former head of FTX, denied hiding billions of dollars and offered his views on what happened to his bankrupt platform in a new long post on Substack released Thursday. He denied stealing funds and claimed that FTX and its subsidiary Alameda Research collapsed due to the cryptocurrency market crash and Alameda’s inadequate hedging. “I have not stolen funds and I certainly have not hidden billions of dollars,” writes Bankman-Fried. Later in the post, he concludes that “Alameda lost money in a market crash for which it was not adequately covered.” While saying the trading company “has failed to sufficiently cover its market exposure,” he also said it “hasn’t managed Alameda in recent years.” We should still have some outlandish explanations from SBF by his trial date, October 2, 2023.

• Coinbase lays off 950 employees

After being forced to pay $100 million last week to comply with regulators, the US crypto platform announced this week that it would be laying off an additional 950 employees, knowing it had already laid off 1,100 six months earlier. Coinbase also said it will abandon projects it deems have “low odds of success” in order to cut expenses. As evidenced by the chart below, Coinbase has clashed with the Crypto.com platform when it comes to layoffs since 2022.

Block 2: Cryptic analysis of the week

President Xi Jinping’s administration took over favorable measures to the market in recent days, such as the easing of policy towards the tech giants and the strengthening of the real estate sector. In light of these changes, could the cryptocurrency policy also change? Some crypto optimists see this as a real possibility. This is notably the case for the self-proclaimed crypto-billionaire and founder of the Tron who blockchain he expressed his enthusiasm on Twitter

After all, Hong Kong has given priority in recent months creation of a virtual resource center, all under the watchful eye of Beijing. There has even been talk of the possibility of a login program that would allow Chinese people to access cryptocurrencies through Hong Kong.

Julia Leung Fung-yee executive director of the Hong Kong Securities and Futures Commission (SFC), announced that the securities watchdog will offer a range of digital assets that will allow retail investors to trade. Hong Kong’s decision to allow retail cryptocurrency trading comes after months of turmoil in the industry, with the collapse of cryptocurrency platform FTX as the latest blow.

“Over the past year, virtual assets have gone from highs to lows (price). The good thing is that when the scum is removed from the system with the collapse of platforms and some tokens, focus the minds of investors and sellers on protecting investors,” Leung said during a panel discussion at the Asian Financial Forum in Hong Kong on Wednesday.

The SFC will begin accepting applications for Virtual Asset Service Provider (VASP) licenses in mid-2024, Leung said. The new cryptocurrency regime requires all trading platforms and exchanges to apply for a license or face fines and jail time.

Many China observers will dismiss these speculations as highly fanciful. Aside from the catastrophic consequences of the FTX debacle, policy makers are still wary of issues such as energy wasted mining cryptocurrency and the dangers of speculating on cryptocurrencies.

Still, even a partial easing of restrictions from China would be a boon for the industry, a boon tantalizing enough that crypto-miners, crypto-traders, and crypto-investors pin at least some of their hopes on it.

Dreams of a Chinese-led renaissance may be nothing more than a triumph of hope over reason. But optimists can still look forward to the next Ethereum upgrade which is expected to happen in March. His name? Shanghai. We will detail the challenges of this update in a dedicated article.

Block 3: tops and flops

Cryptographic heatmap

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Block 4: Readings of the week

FTX destroyed the Crypto Party in Heaven (wired)

Six OpenAI rivals being tracked by Google and Microsoft (The Information)