Bitget Newsletter: April 3, 2024

Regulatory Spotlight Returns to Cryptocurrency Exchanges

A couple of significant stories broke out this week.

KuCoin Faces Criminal Charges

First, it came to light that KuCoin is facing criminal charges in the U.S. The allegations against KuCoin include a violation of U.S. anti-money laundering regulations as part of its expansion efforts. Founders Chun Gan and Ke Tang are accused of engaging in a conspiracy to operate without a money transmission license and breaching the Bank Secrecy Act by not implementing a sufficient anti-money laundering strategy. It's alleged that their leadership allowed KuCoin to bypass U.S. AML regulations, propelling it to become one of the globe's leading cryptocurrency exchanges.

Despite these serious charges, the cryptocurrency markets showed strength, without witnessing significant downturns. This stability might indicate that investors are either unfazed by regulatory crackdowns on specific exchanges or have already integrated such regulatory risks into their market expectations. Although some market participants dismiss the lawsuit as inconsequential, speculating that KuCoin might merely settle by paying a significant fine, the episode has nevertheless introduced a degree of apprehension in the market. It serves as a vivid reminder of the U.S. authorities' determined stance on enforcing financial regulations within the crypto sphere, hinting at potential hurdles for other exchanges operating outside the bounds of full regulatory compliance.

Coinbase vs The SEC update

A Manhattan federal judge ruled this Wednesday that the case brought by the U.S. Securities and Exchange Commission (SEC) against the cryptocurrency exchange Coinbase will proceed. Judge Katherine Polk found sufficient grounds to consider Coinbase as operating like an unregistered intermediary for securities, largely due to the SEC's compelling allegations in their lawsuit.

Despite this setback, the day brought some positive news for Coinbase. Judge Polk agreed with Coinbase in one aspect, ruling in favor of dismissing the SEC's accusation that Coinbase served as an unregistered broker through its Coinbase Wallet offering. It’s a story we're closely monitoring; however, for now, we don't view it as a significant issue since Coinbase is likely going to have to pay some fines as a result of this.

BlackRock's Tokenized Treasuries Fund Attracts $245M in Inaugural Week

The tokenization movement is unfolding rapidly, a vision long-held by BlackRock CEO Larry Fink that now seems to be materializing. Last week, BlackRock launched a tokenized U.S. Treasuries fund, which astonishingly attracted $245 million in its debut week. According to on-chain data from Etherscan, $244.8 million worth of BUIDL shares are distributed across seven different wallets. BUIDL has quickly become the second-largest tokenized U.S. Treasuries fund, trailing behind Franklin Templeton’s OnChain U.S. Government Money Fund, which has gathered $360.25 million since its inception 11 months ago. The success of BlackRock's venture has pushed the total market cap of tokenized treasury funds to a record high of over $876 million. This surge has contributed to the increased value of certain Real World Asset (RWA) tokens, such as $ONDO, fueling bullish sentiment toward RWA tokens.

This development is incredibly positive for blockchain technology and, by extension, the cryptocurrency market. We've discussed before how the involvement of institutions like BlackRock in blockchain technology could indirectly benefit the crypto market. This instance serves as a prime example of that effect.

Tokenized Real Estate Platform USP Launches

As we discuss the widespread tokenization of assets, it's worth noting the launch of USP, an Ethereum-based platform for tokenized real estate, on Republic. USP aims to democratize real estate investment, allowing investors of all sizes and backgrounds to partake in the ownership of commercial properties. Boasting a robust portfolio valued at $52 million across Southern California, USP is pioneering new standards in the tokenized real estate sector. What distinguishes USP is its use of the Ethereum blockchain to tokenize properties. This method enables global investments without minimum requirements and supports peer-to-peer trading. Such an innovative strategy stands in stark contrast to traditional real estate investment avenues like crowdfunding platforms, private equity, and REITs. These conventional methods are often exclusive to accredited investors, imposing high minimum investment thresholds and providing limited liquidity. By applying tokenization, USP significantly lowers barriers to entry in real estate investment, making it exponentially easier for individuals to own real-world assets (RWAs).

This project has caught my attention. My views align with those of Larry Fink, who predicts the eventual tokenization of all assets. I believe any RWA will eventually be represented on the blockchain, and I am bullish on any project that facilitates this shift.

Meme Coin Mania Continues as Base TVL Crosses $900 Million

Trading activity on Coinbase's Layer 2 network soared to a new peak, with volumes hitting $394 million on March 19, largely driven by meme coin traders. This uptick in activity is believed to be influenced by both traders and automated bots. The spike followed closely on the heels of the Ethereum 'Dencun' upgrade's mainnet launch on March 13 (note: please confirm the correct spelling of the upgrade), which significantly cut down transaction fees on Layer 2 networks. However, despite the overarching goal of reducing fees, Base saw an increase in its transaction costs due to the surge in network activity.

Moreover, DeFiLlama reports that Base's total value locked (TVL) has nearly doubled in the last month, reaching $900 million by March 20. This growth is predominantly thanks to Aerodrome, the network's top decentralized exchange, whose TVL jumped 180% to $340 million in the same timeframe, bolstered by an investment from the Base Ecosystem Fund, managed by Coinbase Ventures.

Here at Trading Insight, we have a bullish outlook on Base. We suggest our readers delve into protocols debuting on this Layer 2 network, as many offer rewarding points or rewards systems that are ripe for utilization.

Mantle Network Release Thier Rewards Station

Mantle, a Layer-2 network, has also been making significant strides. It introduced a rewards portal that permits MNT holders to acquire Ethena points, referred to as Shards. By engaging with the Rewards Station and locking in their MNT, participants are eligible to receive a portion of the 2.5 billion Ethena Shards, earmarked for distribution by the Mantle treasury over the next month. Ethena, the creator of USDe—a synthetic dollar token that's backed by Ethereum liquid staking tokens and protected with short futures on centralized exchanges—has quickly gained traction. Launched just last month, the initiative has already secured over $1.3 billion in total value locked (TVL). Despite its success, there's ongoing debate about the long-term viability of its notably high 30% yield.

Ethena Labs Announce Release Date Of Its Token $ENA

After the conclusion of Ethena's six-week "Shard Campaign," which boosted the total supply of its stablecoin, USDe, to $1.3 billion, the platform is gearing up to distribute its second native token, identified by the ticker ENA.

The team indicates that the introduction of the ENA token marks the start of the Ethena protocol's decentralization phase.

From April 2 onwards, ENA will be claimable on the project's designated official website for claims, as centralized exchanges gear up for its introduction. On that day, the project will allocate 750 million ENA, equivalent to 5% of the entire 15 billion supply.

This 5% reserved for the airdrop is sourced from the larger pool of 30% reserved for Ecosystem Development. ENA will also serve as a governance token, which means the token will enable holders to influence decisions on a variety of matters, including risk management frameworks, the composition of assets backing USDe, engagements with exchanges and custodians, community grants, and the dimensions of the Reserve Fund, among others.

My Thoughts on $BTC

Finally, I want to wrap this week's newsletter by discussing my thoughts on Bitcoin.

Currently, there are many unanswered questions surrounding Bitcoin, and truthfully, no one can predict with certainty which direction Bitcoin will take next. Trading Insight suggests that $BTC may soon reach $75,000 due to significant liquidity at that level. However, we also recognize liquidity at $60,500, making us cautious about a potential liquidity grab at this level before BTC advances toward new all-time highs.

Our advice is that you all exercise appropriate risk management right now.

This is brought to you by @TheCryptoMann1, @CryptoinsightUK, and @ItsRagnarYT, who have recently partnered with Bitget to help provide the latest cryptocurrency news and technical developments. Be sure to check out their Discord, “ Trading Insight " for more information!

Disclaimer: The views, information, or opinions expressed in the report are intended for informational and educational purposes only. It is not intended or offered to be used as legal, tax, investment, financial, or other advice. Under no circumstances are Bitget, our employees, agents, partners, and/or co-operations responsible for any decision made, action taken, or result obtained from or in reliance on the use of the information herein. Any investment or trading ideas, strategies, or actions should never be taken without first taking into consideration each individual's personal and financial situation and/or without consulting financial professionals.