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Ripple CTO Exposes FDIC Insurance Gaps, Cites Coinbase

Published

3 months ago

July 16, 2024

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Ripple’s Chief Technology Officer David Schwartz has been deeply involved in the online debate surrounding the Federal Deposit Insurance Corporation (FDIC). While he did not attack Coinbase, he did not defend it either.

The safety of crypto holdings in centralized exchanges remains a concern after the collapse of FTX in 2022. The incident opened investors’ eyes to the risks of storing crypto on exchanges versus cold storage.

Coinbase and FDIC Insurance: Ripple CTO’s Critical Analysis

The Ripple CTO detailed some dangers of storing crypto on centralized exchanges. A commercial litigator noted that depositing money into an exchange renders the depositor an unsecured creditor to the exchange. They have “little to no rights if the exchange goes bankrupt” and are the last in line for compensation.

Coinbase came into the discussion as participants probed the implication of FDIC insurance on exchanges. According to Schwartz, the FDIC insurance would only protect the customer if the exchange’s partner bank fails, not the exchange itself. If Coinbase fails and the bank does not have sufficient funds to cover everyone, you may lose out.

“If Coinbase fails and there’s not enough money in the bank, you still lose. This recently happened with Synapse,” Schwarz explained.

Schwartz asserted that he has no reason to think storing crypto on Coinbase is unsafe. Nevertheless, the Ripple executive acknowledged risks associated with centralized exchanges storage, noting, “If they screw up enough, your funds will be lost.”

When the question of Coinbase using FDIC-insured banks to hold users’ deposits separately came up, Schwartz agreed that it was potent. However, he stressed that the exchange would need to have records to determine who the funds belong to.

It, therefore, suggests that while platforms such as Coinbase, among other reputable exchanges, offer convenience, risks are still involved.

FDIC Could Bring New Hope for Bank-Crypto Interactions

Nevertheless, this situation may soon change. The recent nomination of Christy Goldsmith Romero as the new FDIC chair sparked speculation that she could allow banks to independently decide on serving digital asset companies. This follows her response to Senator Cynthia Lummis’ question about traditional financial institutions serving cryptocurrency-related companies.

“I don’t think it’s the FDIC’s role to tell banks what industries or companies they should be providing services to,” Romero stated.

If TradFi can independently decide whether to serve crypto industry players, it could deliver better interactions between banks and digital asset service providers. Coinbase Chief Policy Officer Faryar Shirzad echoed Romero’s statement, citing Operation Chokepoint 2.0’s impact on the crypto sector.

“The bank regulators right now claim – as the nominee suggests here – that there is no targeted debanking of the sector, and that banks are currently free to bank crypto companies subject to normal internal risk management reviews,” Shirzad stated.

Nevertheless, it would also mean a paradigm shift. This is considering a recent decision between the FDIC, the Federal Reserve, and the Office of the Comptroller of Currency. Dissecting the risks of crypto-assets to banking organizations, the three agreed business models focusing on crypto activities are a concern to the banking sector.

This stance has caused strife between banks and the crypto industry. In turn, Coinbase filed a lawsuit against the FDIC and the US Securities and Exchange Commission (SEC).

These developments highlight the industry’s frustrations as traders, investors, and institutions walk the thin line separating traditional finance and crypto.

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In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.

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Related Topics:Cites Coinbase CTO Exposes FDIC Gaps Insurance Ripple

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Justin Sun Moves $21.8 Million In EIGEN Amid Token Unlock Buzz

Published

46 mins ago

October 1, 2024

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Justin Sun claimed all his EIGEN tokens from the EigenLayer liquid restaking protocol on Tuesday via five different addresses and moved them to the HTX digital currency trading platform.

EIGEN is the native token for the EigenLayer ecosystem, a leading restaking protocol on the Ethereum blockchain. This development comes amid hype over the EIGEN token listing on multiple tier-one exchanges.

Justin Sun Transfers $21.5 Million in EIGEN Tokens to HTX

Spotonchain reported the transaction, indicating that the Tron executive deposited all 5.24 million EIGEN tokens to HTX during the early hours of the Asian session. The transaction happened shortly after EIGEN debuted on major exchanges, including Binance. WuBlockchain corroborated the report.

“Justin Sun’s team has transferred 5.37 million EIGEN to Huobi HTX through five addresses, worth about $21.8 million. Based on the current price of 4.06 USDT, the EIGEN FDV is about $6.8 billion,” Wu Blockchain reported.

Crypto researcher Ai on X speculated on whether Justin Sun “is ready to ship EIGEN,” noting that it is currently unclear whether the receiving address belongs to the exchange. Nevertheless, the expert highlighted that the controversial crypto executive could make a profit of around $22.19 million if he cashed in at the current price of $4.13.

Read more: What Is Liquid Staking in Crypto?

Justin Sun Unstakes EIGEN. Source: X/Twitter

Sun reportedly received the largest airdrop of EigenLayer’s EIGEN tokens, amassing over $38.74 million in airdrops through the Ethereum Restaking track. This positions him to become the biggest beneficiary in the latest round of liquid restaking tokens (LRT), as per Ai’s report, which noted pending airdrop settlements from protocols like Puffer, Zircult, Swell, and Kelp.

Interestingly, when high-profile figures transfer significant token amounts to exchanges, it is often seen as a sign of intent to sell. While Justin Sun hints at selling his EIGEN tokens, two whales are accumulating, purchasing 702,324 EIGEN tokens valued at $2.86 million on Tuesday morning.

Specifically, one spent 588 ETH or $1.55 million to buy 383,672 EIGEN at an average price of $4.05. The other spent 1.31 million USDC to buy 318,651 EIGEN at $4.1 per token. These purchases come in time for the EIGEN token unlock.

Eigen Foundation Announces Token Unlock

The Eigen Foundation, which drives the growth of the EigenLayer ecosystem, has announced the unlocking of the EIGEN token for Season 2. This follows the opening of stake drop claims in mid-September, with the claim window running from October 1, 2024, to March 16, 2025, on the Eigen Foundation’s website.

Justin Sun’s involvement with EigenLayer isn’t new; his participation in the Season 1 airdrop in May sparked controversy. With this latest token unlock, users can freely transfer, trade, or stake their EIGEN tokens, fully engaging in the token’s utility.

EigenLayer also introduces a unique shared security system, where staked ETH serves as security for protocols beyond Ethereum. The EIGEN token plays a role in securing Actively Validated Services (AVSs), further enhancing its utility.

EIGEN Price Performance, Source: BeInCrypto

This development positions EigenLayer as a “verifiable cloud for crypto,” opening opportunities for sidechains, Oracle networks, bridges, and more. According to BeInCrypto, the EIGEN token is currently trading at $4.15, reflecting a 3.47% increase since Tuesday’s session opened.

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Robinhood Brings Crypto Transfers to Europe

Published

2 hours ago

October 1, 2024

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Robinhood has launched crypto transfer services in Europe, enabling customers to move cryptocurrencies in and out of its app. This move highlights the American financial services company’s dedication to expanding its product offerings and strengthening its global presence in the crypto market.

Speculation arose that the retail investing platform is exploring the stablecoin market, but Robinhood has firmly denied this claim.

Robinhood Enables Crypto Transfers in Europe

Customers in the European Union can now deposit and withdraw over 20 digital currencies, including BTC, ETH, SOL, and USDC, via Robinhood’s platform. They can also self-custody assets instead of storing their holdings with third parties.

With the launch of the service, European customers can receive 1% of the value of tokens deposited on the platform back in the form of the equivalent cryptocurrency they transfer into Robinhood, a limited-time marketing strategy.

This development comes barely a year after Robinhood Crypto forayed into the EU market. The venture allowed customers to buy and sell cryptocurrencies. However, they could not move them away from the platform to another third party or their own self-custodial wallet. The latest development changes that.

Robinhood’s move to bring crypto transfers to Europe acknowledges the region’s potential to become an attractive market for digital currencies. Its general manager and vice president, Johann Kerbrat, cited crypto-friendly regulations adopted in Europe’s 27-member bloc. In his opinion, things could be better once Markets in Crypto-Assets (MiCA) are in full effect.

This regulatory clarity has allowed companies like Circle to obtain an Electronic Money Institution (EMI) license, enabling them to offer dollar- and euro-pegged crypto tokens under the MiCA framework.

Amid this environment, there was speculation that Robinhood was exploring stablecoin launches alongside Revolut, but the retail investing platform has denied these claims. The firm put out the speculation, citing no “immediate plans” to launch its own stablecoin.”

“On our side, we don’t have any imminent plan. It’s always kind of funny in my position to see where people think we’re going to move next,” Kerbrat said in an interview with a news site.

Rumors notwithstanding, Tether’s USDT dominance in the stablecoin market could face significant competition as sector regulation improves in the EU. As BeInCrypto reported in July, Circle’s USDC stablecoin leads regulated stablecoins with a $23 billion volume, effectively challenging reserve-backed stablecoin First Digital USD’s (FDUSD) 14% market share.

USDC’s main market rival in the stablecoin market, Tether’s USDT, is not EMI-licensed. Its CEO, Paolo Ardoino, is still unconvinced by MiCA’s expectation of 60% backing in bank cash.

Also read: What Is Markets in Crypto-Assets (MiCA)? Everything You Need To Know

These developments highlight the potential of the MiCA framework to shift the balance in favor of compliant stablecoins.

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Bitcoin Price Back at Support: Can It Avoid a Breakdown?

Published

3 hours ago

October 1, 2024

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Bitcoin price started a fresh decline below the $65,000 level. BTC is now testing the $62,850 support zone and might start another increase.

Bitcoin is correcting below the $65,500 zone.
The price is trading below $65,000 and the 100 hourly Simple moving average.
There is a connecting bearish trend line with resistance at $63,500 on the hourly chart of the BTC/USD pair (data feed from Kraken).
The pair could start another increase if it stays above the $62,500 support zone.

Bitcoin Price Revisits Support

Bitcoin price started a fresh decline from the $66,000 resistance. BTC broke the $65,000 and $64,500 support levels to move into a short-term bearish zone.

The price even dipped below $63,500. A low was formed at $62,883 and the price is now consolidating losses. The price is now trading below the 23.6% Fib retracement level of the downward move from the $66,055 swing high to the $62,833 low.

Bitcoin is now trading below $64,500 and the 100 hourly Simple moving average. If there is a fresh increase, the price could face resistance near the $63,500 level. There is also a connecting bearish trend line with resistance at $63,500 on the hourly chart of the BTC/USD pair.

The first key resistance is near the $64,500 level. It is close to the 50% Fib retracement level of the downward move from the $66,055 swing high to the $62,833 low.

A clear move above the $64,500 resistance might send the price higher. The next key resistance could be $65,500. A close above the $65,500 resistance might spark more upsides. In the stated case, the price could rise and test the $66,200 resistance level. Any more gains might send the price toward the $68,000 resistance level.

More Losses In BTC?

If Bitcoin fails to rise above the $63,500 resistance zone, it could continue to move down. Immediate support on the downside is near the $63,000 level.

The first major support is near the $62,850 level. The next support is now near the $62,500 zone. Any more losses might send the price toward the $61,200 support in the near term.

Technical indicators:

Hourly MACD – The MACD is now gaining pace in the bearish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now below the 50 level.

Major Support Levels – $62,850, followed by $62,500.

Major Resistance Levels – $63,500, and $64,500.

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