Daily Flash | The Fed Establishes Different Tiers of Scrutiny for Crypto Banks, Acala aUSD Peg Back to $1, Tornado Cash Ban And Dev Arrest Spark Deeper Concerns

Today's Headline - Federal Reserve Releases New Guidelines for Crypto Banks: Axios Report

The Federal Reserve Board on Monday announced final guidelines that could open up a path for institutions peddling new types of financial products, or those with novel charters, to tap into the banking system.

In a statement, Fed Vice Chair Lael Brainard said,

"The new guidelines provide a consistent and transparent process to evaluate requests for Federal Reserve accounts and access to payment services in order to support a safe, inclusive, and innovative payment system.”

The guidelines seek to clarify a longstanding question critical to the crypto industry — who is allowed to have a master account. Such accounts would allow crypto banks and fintech platforms to access the central bank's rails (payments and services) without partnering with a traditional bank.

The Federal Reserve Board doesn't specifically lay out what to do for specific charters, rather, they establish tiers indicating the level of scrutiny an entity in that tier can expect.

Tier 1 would consist of federally-insured applicants, and Tier 2 includes institutions that are not federally insured but are still “subject to federal prudential supervision."

Tier 3 includes institutions that are neither federally insured nor subject to prudential supervision, but rather subject to “a supervisory or regulatory framework that is substantially different from, and possibly weaker than… federally insured institutions.”

When addressing the potential that these guidelines could expand services to novel institutions “that pose high levels of risk,” the Fed made sure to note that they “do not establish legal eligibility standards but instead establish a risk-focused framework for evaluating access requests from legally eligible institutions under federal law.”

Chart of the Day - Bitcoin Supply's Expansion in Maturity: Glassnode Report

As of this writing,
Bitcoin (BTC) is changing hands at around $24,025, up 0.04% in the past 24 hours,
while Ether (ETH) is trading at $1,882, or down 1.3% during the same period.
Major altcoins are seeing a mix of weak gains and losses, with Cardano (ADA) up by 0.44%, Solana (SOL) -2.23%, Polkadot (DOT) -1.2%, Avalanche (AVAX) -0.29%, and Cosmos (ATOM) +0.75%.

Notable gainers include:
Circuits of Value (COVAL) at $0.0174 (+37.11%),
Voyager Token (VGX) at $0.365 (+20.17%),
Injective Protocol (INJ) at $2.09 (+18.01%).

Notable losers include:
Civic (CVC) at $0.191 (-14.86%),
Maple Finance (MPL) at $18.77 (-9.80%),
Frax Share (FXS) at $5.88 (-7.49%).

The crypto market remained cautious on Monday after experiencing a brief period of positive sentiment last week.

Despite the U.S. equity market closing in the green, with the S&P 500, Dow Jones Industrial Average (DJIA), and tech-heavy Nasdaq composite up 0.4%, 0.45%, and 0.62% respectively, crypto investors seem unfazed.

Bitcoin (BTC) was recently trading at $24,032, or up 0.11%, while Ether (ETH) was trading at $1,882, or down by 0.96%. Both BTC and ETH have found support above their respective 12-Day EMA, or $23,835 and $1,838, as of this writing.

Two of Sunday's big winners, the popular meme coins SHIB and DOGE, became losers on Monday, plunging more than 9% and 7%, respectively, but have since risen 3.07% and 9.99% on Tuesday.

Influencer of the Day - Kevin O’Leary Says Sacrificing Tornado Cash Worth It for Institutional Adoption

In a recent discussion on the Crypto Banter YouTube channel, millionaire venture capitalist Kevin O’Leary shared a few thoughts supporting the recent sanctions against Tornado Cash. He stated that Tornado Cash and similar services are a part of a “crypto cowboy” culture that is preventing real institutional capital from coming into the space.

On the subject of Tornado Cash creator Alexey Pertsev being arrested, he stated,

“At the end of the day, it’s okay to arrest that guy. Why? He’s messing with the primal forces of regulation [...] If we have to sacrifice him, that’s okay, because we want to have some stability in that institutional capital.”

He emphasized the need for a “rules-based environment” in the crypto industry in order to attract real institutional capital.

Buzzes of Yesterday - #Acala Community is Concerned as Network Freezes to Stop Hacker, #Tornado Cash Ban and Arrest Spark Fears of Global Crypto Enforcement

Acala Network aUSD Peg Returned To Normal as Hacker Nearly Issued Over 1 Billion Tokens

Starkware launches recursive proofs in bid to boost Layer 2 scaling

Tornado Cash developer arrest sparks fears of global crypto enforcement

NFT marketplace Sudoswap set 0% royalties, sparking concerns about the future of artist compensation

Samsung Agrees to Use NFTs for Offline Shopping

BitGo to Sue Galaxy Digital for Pulling Out of $1.2B Acquisition Deal

Bitcoin Miner Bitfarms Posts $142M Loss in Q2 as Rising Energy Prices Bite

Bitcoin miner Greenidge Generation 'pauses' Texas expansion plans, reports $107.9 million in Q2

Investment firm Dragonfly acquires crypto hedge fund MetaStable Capital

The EU is on the verge of creating a new AML regulator that will oversee crypto

Brazil’s Largest Brokerage, XP, Launches Bitcoin, Ether Trading

Author: Gate.io Researcher Peter L.
This article represents only the researcher's views and does not constitute any investment advice.
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