Binance, the world’s largest crypto exchange by trading volume, saw $902 million of net outflows on Monday amid rising concerns about solvency. The exchange published a proof-of-reserves report by auditing firm Mazars for its bitcoin holdings showing it was overcollateralized – though many found the non-audit lacking. The exchange’s BNB token has dropped 8% and several BSC-based DeFi protocols are seeing outflows. Meanwhile, Tron’s Justin Sun deposited $100 million in USDC at Binance, after the exchange temporarily suspended withdrawals of the dollar-pegged stablecoin. Earlier this year, Binance began swapping customer’s USDC deposits for BUSD (which is administered by Paxos).
Regulators’ Move
The U.S. SEC responded in a brief last Friday to Grayscale in an ongoing lawsuit over attempts to convert its flagship Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF). The agency reiterated reasons for denying Grayscale’s application, saying its decision was consistent with earlier denials of otherspotbitcoin ETF applications. Shares of GBTC are trading at a record 47% discount to the value of the underlying cryptocurrency. Grayscale is a sister company of CoinDesk. Separately, a federal judge has ordered the CFTC to serve its lawsuit to the two original founders of the Ooki decentralized autonomous organization (DAO).
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“There was some assumptions that were made with the technology that just because it’s crypto, it’s safe and it’s secure.”
– Famed whistleblower and Nym security engineer Chelsea Manning, on CoinDesk TV’s “First Mover”
The Takeaway: Repairing Crypto’s Reputation
US Capitol Building Washington DC (Getty Images)
Following the failure of FTX, it’s understandable that lawmakers want to do something, but they should be wary of passing legislation in haste that would do more harm than good.
Congress should take its time to investigate the issues we’ve seen and work closely with the crypto industry to find solutions that benefit everyone. But it’s not just lawmakers who need to do their due diligence. The crypto industry has a significant role to play in alleviating concerns and rebuilding trust. So how do we do that?
First, we must continue investing in our Washington presence. We have a strong advocacy apparatus in place, but we’re still far behind our competitors in traditional finance. With greater investment in teams of advocates, both internally among individual companies and in advocacy associations, we will have greater success at getting in front of lawmakers and promoting smart policy solutions.
Second, we need to double down on education and show the societal benefits that crypto networks provide. Decentralized finance, or DeFi, has the power to expand financial access to underserved communities, streamline business functions and democratize the digital ecosystem. By sharing that story through briefings and meetings with key policy stakeholders, we can show that crypto is truly here for good and promote a positive regulatory environment.
Finally, we need to continue building relationships with lawmakers. This is done by meeting lawmakers where they are, answering tough questions and being transparent about our operations and values. Additionally, we need to come to the table with good policy ideas to prove our commitment to a mutually beneficial policy framework.
The collective voice of crypto – a voice that has been here for years and will remain for years to come – represents something far greater than one man or one company. We represent the innovators, the builders, and the investors in our future working to build a better internet for all.
While our reputation has taken a few body blows, we have to double down on rekindling relationships and restoring trust to ensure we advance policies that will set us up for future success.
After FTX, where does the industry go from here? In Consensus Magazine this week, we share a series exploring what could, and should, happen in the year to come. Check out a few of our featured posts here:
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*This is sponsored content from Bitget.
Off-Chain Signals
The Parents in the Middle of FTX’s Collapse (NYT – paywalled)
For SBF and FTX, the fraud started from day one. That and other revelations from the SEC (The Block)
