The Weekly Pen: Bans, expands, & the invisible hands

# tradfi
# money
# blockchain
# crypto

Many of the previous weekly pen weeks have been clouded with the fall FTX, however, this week has been overshadowed by their archnemesis Binance. While one might wonder what the fuss and FUD are all about, The Pen team is wrapping up week 50 with a quick overview of the Binance saga and progressive trending news from the world of TradFi and the global economy. Enjoy your read.


Mr. Wonderful, Kevin O’Leary mostly famous as the one the hosts of the U.S. hit show 'Shark Tank’, who’s also an investor in FTX has been very vocal about accusing Binance of malicious intentions against SBF and his then organization, but the U.S. DOJ, feels differently. Whilst there are many more pieces of evidence and facts that need to be put forth in order to charge Binance for unjustly causing FTX to falter to the ground, the DOJ is split over charging Binance over potential money laundering violations as well as sanction violations. At least six federal prosecutors believe the evidence gathered so far justifies filing criminal actually charges against Binance and its individual executives including CEO Changpeng Zhao (CZ). The investigation began back in 2018, however, any criminal charges could weaken Binance’s position of strength in the market after the fall of FTX, however, one might think that there are other concerns to be taken into consideration, read on.


Fear Uncertainty Doubt, or commonly known as FUD, has been the mantra of the crypto community for halting the sentiments of panicky traders and investors on social media platforms. However, the post-fall of FTX preceded by various other crypto giants in the space, has caused traders to withdraw their funds out of Binance as fast as Usain Bolt on a hot day. At the time of writing, so far $6 billion has been withdrawn from the exchange, as investors run for their and store their crypto holdings on cold wallets during an already cold crypto winter. Just 5 days ago, Binance suspended withdrawals after $1.9 billion was taken out of the exchange. Halting, and suspending from crypto giants has been the brightest red flag for creating FUD.


Not only are various exchanges halting withdrawals, but Binance auditor Mazar has also paused all proof-of-reserve work among cryptocurrency clients and that includes Binance. Proof-Of-Reserve, quickly became the holy grail of exchanges post-FTX collapse, to showcase to their users that their money was by providing unbiased reports of the companies' assets in reserve verifying that an institution can cover its customers’ funds. However, that proves very little until full transparency of all auditing is evident (*clearing throat Penning). Mazars' argument for halting their work was in fear of how the general public views these reports.


Wall Street Giant Goldman Sachs, a relentless better on bitcoin, believes that Gold will outperform Bitcoin as a future store of value, and can prove to be a better long-term investment. This also comes after them, as well as the other financial community members believing that Bitcoin together with all other cryptos will be influenced under tighter regulation. This comes after the bank is hunting for bargain crypto companies (as mentioned in our previous weekly pen). How long did it take for Gold to become the standard?


Consensys inc., the web3 company behind the leading crypto wallet MetaMask, has launched a PayPal integration with its software wallet, allowing U.S.-based users to purchase Ethereum (ETH). The MetaMask integration is part of ConsenSys’ plans to help bring more users into the Web3 ecosystem as the sector is looking for a way forward during the crypto winter. However, the on-ramp solution is currently only offered to select users.


The Bank of Italy has selected Algorand, the builder of technology that accelerates the convergence between decentralized and Tradfi. The Bank intends to launch a new digital guarantees platform. The new platform is expected to become operational already in early 2023 and will also mark the first time an EU member state enables the use of blockchain technology for bank and insurance guarantees.


The bank whose share price dropped 65% in 2022 alone, is testing out what Blackrock believes will be the future of securities. Credit Suisse is testing securities tokenization on a public blockchain. Together with Pichet and Vontobel, they’ve issued tokenized investment products on the Ethereum blockchain test net and settled transactions with fiat currency.


Following the global trend of tightening the crypto regulation in the aftermath of recent market failures, France may reassess its eased regime of licensing for digital asset providers. That would challenge the nation’s efforts to present itself as one of the most pro-crypto countries in Europe. Hervé Maurey, a member of the French Senate’s finance commission, proposed an amendment to eliminate a clause enabling crypto companies to operate without a full license until 2026. The current regime preserves this possibility even after the Markets in-Crypto Assets (MiCA) came into law in 2024. In the words of Mr. Wonderful “The Prize of Crypto is getting regulated.”


Authorities in Canada are taking measures to better protect Canadian cryptocurrency investors in the aftermath of the FTX collapse and the spreading contagion. The Canadian Securities Administrators (CSA), the council of Canada’s provincial and territorial securities regulators, on Dec. 13 issued an update to crypto trading platforms operating in the country. The now-defunct exchange FTX tried to enter Canada in June 2022, but local regulators have managed to prevent the mess from happening. The country is taking greater measures to better protect Canadian cryptocurrency investors in the aftermath of the FTX collapse and the spreading contagion.


The FED has raised interest rates for the seventh time this year to cool inflation. The rates one gets for a mortgage, credit card, car loan, student debt, and savings could very well be affected. With another half a point raise of interest rate, it has reached to its highest level in 15 years. If you thought this was the final raise and it is coming to an end to finally stabilize inflation think again, as there has been an indication that officials expect to keep rates higher through next year, with no reductions in sight until 2024. The Weekly Pen covered the FED rate hikes in week 44 with an end quote “When and where is the next, where and when do we stop?”. Guess we sort of know now.