Bitcoin plunged to lowest level since February as Mt Gox repayments began, while Germany sells and SEC targets Consensys

July 8, 2024
Francisco Memoria

DATA from CryptoCompare shows that the price of Bitcoin dropped by around 8.7% over the past week from over $63,000 to just above $57,000 as it recovers from a wide market sell-off that saw the cryptocurrency space lose billions.

Ethereum’s Ether, the second-largest cryptocurrency by market capitalisation, dropped by around 11.5% over the same period to now trade just above the $3,000 mark, down from over $3,400 last week. The cryptocurrency saw $2,850 lows before recovering.

Headlines in the crypto space this week shed some light on the sell-off, as the defunct cryptocurrency exchange Mt Gox, which at one point dominated Bitcoin trading volumes, started paying creditors after a 10-year long waiting period after its bankruptcy.

The exchange went down in 2014 after a massive security breach led to the loss of an estimated 740,000 BTC and then bankruptcy. Some of the stolen coins were recovered, and are now being distributed to creditors, along with the Bitcoin Cash (BCH) created through a hard fork of the Bitcoin blockchain in 2017.

The start of the repayments process added selling pressure to the market, which was already seeing Bitcoin miners sell as they absorb the financial hit of the cryptocurrency’s halving event in April that cut Coinbase rewards earned per block found in half.

On top of this, the German government has been sending Bitcoin to exchanges after seizing nearly 50,000 BTC from the operators of film piracy platform, which was last active over a decade ago. These sell-offs saw Bitcoin drop to its lowest level since February as it traded at a low of $53,763.63 before recovering.

Over the week and ahead of the significant price drops, it was reported popular commission-free trading platform Robinhood is considering offering cryptocurrency futures in the United States and Europe in the coming months, adding to its $200 million acquisition of Bitstamp that is expected to close next year.

SEC sues Consensys over MetaMask's ‘unregistered offers and sales of securities’

This week saw the US Securities and Exchange Commission (SEC) maiontain its aggressive approach to the cryptocurrency space, suing the developer of popular cryptocurrency wallet MetaMask, Consensys, alleging it acted as an unregistered securities broker through the wallets 'Swaps' feature.

The lawsuit also targeted third-party staking service MetaMask integrates into its staking service, and claims that the wallet’s role in these stakes services amounts to offering of “investment contracts.” These services came form Lido and Rocket Pool, which suggests the regulator sees liquid staking tokens such as stETH and rETH as unregistered securities.

The move comes weeks after the regulator approved spot Ether exchange-traded funds (ETFs). Meanwhile, the Internal Revenue Service (IRS) released a revised version of its proposed regulations on cryptocurrency broker reporting requirements.

While an initial draft sparked concern over its broad definition of “broker” as it could encompass non-custodial platforms like decentralized exchanges, the revised guidelines detail centralized exchanges like Coinbase and Kraken will be subject to the new reporting rules, which partially go into effect in 2025.

The rules being implemented on decentralized, non-custodial protocols remain unclear as the filing details that the "Treasury Department and the IRS would benefit from additional consideration of issues involving non-custodial industry participants.”

The week also saw the issuer of the popular USDC stablecoin, Circle, secure a key license in France that made it the first global stablecoin issuer to comply with the European Union’s new Markets in Crypto-Assets (MiCA) regulatory framework.

The stablecoin issuer receive an electronic money institution (EMI) license from the French banking regulator, Autorité de Contrôle Prudentiel et de Résolution (ACPR), allowing it to issue its stablecoins USDC and EURC in compliance with MiCA’s regulatory obligations.

Russia's central bank eases crypto stance amid sanctions pressure

Russia's central bank has signaled a more welcoming stance towards cryptocurrencies over the week as it faces mounting pressure from Western sanctions, and is now telling businesses they should use “multiple choice solutions” including crypto to facilitate payments with foreign partners.

Governor Elvira Nabiullina, speaking at a financial conference, acknowledged the severe challenges posed by sanctions on Russian financial institutions and the country's alternative to the SWIFT international payments system.

To navigate these hurdles, Nabiullina announced a more lenient approach towards cryptocurrencies saying new financial technology “creates opportunities for schemes which did not exist before” and as a result the central bank is softening its stance “on the use of cryptocurrencies in international payments".

Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.