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crypto news review
bitcoinadmin February 13, 2023 No comments News permalink

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News review 2/13: Kraken, Paxos, Localbitcoins, EUROe, Artificial intelligence cryptos, Ordinals

Both Kraken and Paxos have been attacked by the SEC. LocalBitcoins, which has been operating for more than ten years, is closing its doors. The Finnish EUROe stablecoin was launched on the Ethereum blockchain. AI cryptos are the hottest thing in 2023. The popularity of Bitcoin’s Ordinals protocol remains high.

Kraken and Paxos hit by SEC

There is a state of war going on in the United States between the government and cryptocurrencies. Several government agencies have attacked the crypto industry, led by the SEC, which oversees the securities market.

A well-known influencer in the crypto sector, Nic Carter, published an article a couple of days ago in which he goes through the situation in detail. “Operation Choke Point 2.0 Is Underway, And Crypto Is In Its Crosshairs” is the title of the article. The Coin Bureau channel summarizes what it’s all about in this video.

Last week two news events took place. The US crypto exchange Kraken had to close its staking service and pay 30 million dollars to the SEC. This is how SEC boss Gary Gensler commented on the decision in an interview with CNBC.

According to the SEC, Kraken’s staking service involved illegal trading of securities. It is the security status that is behind all SEC charges. That’s also what the years-long Ripple vs. SEC legal battle is all about.

It appears that the SEC pounced on Kraken at the right time (as far as the SEC is concerned). Kraken didn’t have the time and money to fight it out in court, so it threw down the gauntlet and paid the fines. However, Kraken’s competitor, Coinbase, isn’t bending as easily.

The SEC has not (yet) launched a similar attack on Coinbase. Coinbase CEO Brian Armstrong has already announced that the company intends to fight the issue in court if necessary. Coinbase has about five billion dollars in cash based on the Q4-2022 report.

Today (Mon 13.2.) we received more news. The SEC has also attacked Paxos, which is behind the Binance USD stablecoin.

According to the SEC, BUSD is an illegal security. At the same time, the New York Attorney’s Office has prohibited Paxos from minting new BUSD tokens.

The news has not crashed the BUSD market, as Paxos still continues to operate the stablecoin. All BUSD holders can convert the token to US dollars as before. If you keep your funds in BUSD stablecoin, you should convert them to other stable currencies (USDT, USDC, DAI) as quickly as possible.

BUSD will practically be run down and decommissioned in the near future. Binance boss Changpeng Zhao said on Twitter that the company is currently exploring other options.

According to Paxos’ announcement, the company is ending cooperation with Binance regarding the BUSD token. Many analysts think that the SEC wanted to actually attack Binance, rather than Paxos. As a US-based and regulated operator, Paxos was an easy target.

LocalBitcoins is going out of business

LocalBitcoins is a cryptocurrency trading place unknown to many. However, it is one of the oldest operators in the industry. Unfortunately, the present tense has to be changed to the past tense, because we received bad news from LocalBitcoins.

The company announced on Thursday of last week that it will be closing its operations. Customers have 12 months to empty their wallets.

Many “Bitcoin OGs” have bought their first coins from LocalBitcoins. It enabled P2P trading directly between individuals using a separate escrow account. It was possible to buy bitcoins with cash or other e-wallet payments that are not supported by standard crypto exchanges.

There are likely two major factors driving down LocalBitcoins: KYC and DeFi. LocalBitcoins operated without KYC in the early years of the service. However, tightening regulations brought mandatory identification a few years ago. At the same time, the company had to block certain countries completely.

At the same time, the DeFi sector has risen from nowhere. There are fully decentralized exchanges where you can trade anonymously. It is also easy to buy bitcoin, e.g., on the Ethereum network as a WBTC token. There are similarly wrapped bitcoins in the DEXs of other platforms. The competitive advantage of LocalBitcoins has thus disappeared.

EUROe stablecoin was launched on the Ethereum network

Let’s continue with news about Finland and switch to a more positive tone. We reported two months ago about the launch of the Finnish EUROe stablecoin. As the name suggests, EUROe is a euro-based stablecoin. It is brought to the market by Membrane Finance, which has been granted the EU’s first euro-stablecoin license by the Finnish FSA.

The announcement made in December was mostly about the fact that EUROe exists and will be on the market soon. EUROe officially “set foot” on the Ethereum blockchain on the second day of February.

Go to dev.euroe.com to find the smart contract address that controls the token. You can use that to find EUROe on decentralized exchanges. Right now it’s possible to buy EUROe at least on Uniswap. The trading volumes have so far been well below $100,000 per day.

We have no information on whether the Finnish crypto exchanges (Coinmotion & Northcrypto) are adding EUROe to their selections in the near future. They probably are.

EUROe is not the first euro-based stablecoin on the market. However, its regulatory status gives it a good position vis-à-vis its competitors. The new EU crypto regulation (MiCa) will be introduced in the coming years. EUROe meets all the requirements of the MiCa framework.

So far, the demand for euro stablecoins has been very small. The situation will almost certainly change in the coming years due to the regulation. There will be some kind of restrictions for USD stablecoins for sure.

AI cryptos are the hottest coins of 2023

Artificial intelligence cryptos, AI cryptos, or AI coins. A new sector that doesn’t even have an established name has come to the attention of investors this year. What is it really about?

The term artificial intelligence is not necessarily clear to everyone. According to Wikipedia: “Artificial intelligence (AI) is intelligence — perceiving, synthesizing, and inferring information — demonstrated by machines, as opposed to intelligence displayed by non-human animals and humans.”

Activities considered intelligent are, for example, learning, problem-solving, and reacting to various inputs. Artificial intelligence has made headlines in the mainstream media thanks to ChatGPT. This chatbot became the fastest software in history to gain a million users in 2022.

So, what are AI cryptos then? We have recently published a comprehensive article on the subject, which introduces the best-known AI coins on the market.

ai

Artificial intelligence cryptos do not mean the symbiosis of AI and blockchain. These are cryptocurrencies (tokens) that are needed to use a specific app or marketplace. This application or software is directly or indirectly in the AI ​​sector.

There are also cryptocurrencies placed in the AI ​​coins category that are only related to data processing. A good example is The Graph, which is a blockchain indexing protocol. Its price has risen by hundreds of percent in January on the wing of the AI ​​boom.

Interestingly, many players in the sector have already been around since the crypto boom of 2017. A good example of this is the Fetch.ai project. Artificial intelligence hasn’t simply been a hot enough topic. Not yet, but the situation has now changed.

We urge investors to be careful with such hot trends. Think twice before you invest in a cryptocurrency with a small market cap that has already seen a price rise of hundreds of percent in a short period of time. Hopefully, investors have learned something from the DeFi, NFT, and meme coin booms of 2021.

Artificial intelligence is certainly one of the biggest trends of this decade. We will probably see many more AI-related booms and busts in the next years.

The Ordinals protocol is growing in popularity

We reported two weeks ago about the new Ordinals protocol. It’s a Bitcoin add-on that has created an uproar among Bitcoin maximalists. In short, Ordinals allows you to store a Bitcoin NFT, i.e. an image, text, or video, on the Bitcoin blockchain.

Last week we published a comprehensive beginner’s guide to the Ordinals protocol. Ordinals developer Casey Roadmor describes the protocol as a lens to the Bitcoin blockchain. When you use the “Ordinals lens” you can see data that would be normally invisible.

Ordinals were originally developed to track the movement of individual satoshis in the Bitcoin blockchain. The Inscriptions part of Ordinals allows metadata (NFTs) to be attached to a satoshi. Data from Dune Analytics shows that the inscriptions feature has gained great popularity.

dune analytics

During the previous week, 5,000-10,000 Bitcoin NFTs have been “minted” per day, and on the best day more than 20,000 pieces. Inscriptions data must be viewed through the Ordinals Explorer, which can be found at ordinals.com/inscriptions.

Since Bitcoin is a censorship-resistant and decentralized technology, no one can prevent the use of the Ordinals protocol. In other words, anyone can store anything they want on the Bitcoin blockchain. Founder Casey Roadmor has already had to remove pornographic material from explorer.

In addition to this, people have started to mint e.g. Bored Apes and Crypto Punks NFTs in the Bitcoin blockchain. There is no Bitcoin NFT trading platform or infrastructure, but that won’t bother the most die-hard NFT traders. Trade is conducted using trades saved in Google Docs.

At the moment, it seems that there is a clear minority of Bitcoin maximalists against the Ordinals. Finland’s most famous Bitcoin expert, Henry Brade, commented on the subject on Twitter as follows:

What do I think of NFTs on Bitcoin? As a fundamental concept, I think NFTs are interesting. And it only makes sense to put them on the most secure and robust blockchain on the planet. NFTs on insecure blockchains made no sense in the first place.

Ordinals has created the biggest buzz around Bitcoin since the block size war of 2017. The Ordinals protocol is here to stay because no one can stop people from using it. Time will tell if Ordinals will ultimately be a positive development for the Bitcoin ecosystem or not.