Coinbase will list Tether’s USDT (+0.01%) on its professional trading platform, allowing investors to deposit the dollar-pegged stablecoin immediately and to begin trading next week.

Coinbase Pro announced late Thursday it would immediately allow “inbound transfers” for USDT in its supported jurisdictions, except for the U.S. state of New York. The stablecoin has been fraught with controversy over questions of its backing and its role in the broader Bitcoin ecosystem, and at one point was the subject of an inquiry by the Office of the New York Attorney General (NYAG).

The NYAG settled the inquiry this year, stating that at previous points USDT was not fully backed by U.S. dollars but declined to bring any enforcement or regulatory action. Under the terms of the settlement, Tether will provide a periodic report to the NYAG indicating how the stablecoin is backed and what its reserves look like, starting in May.

Tether has since announced it would provide regular attestations, though these are different from the reports it will send to the NYAG and similar attestations from stablecoin issuers including Centre, Paxos and Gemini.

USDT is listed on the U.S.-based Kraken and Binance.US exchanges, but Coinbase is subject to closer regulatory scrutiny, having gone public last week on the U.S. Nasdaq exchange. The public listing subjects Coinbase to oversight by the U.S. Securities and Exchange Commission, which could include its token listings.

As such, Coinbase’s move Thursday could be read as a vindication of sorts for Tether, long criticized as less-than-forthright about the composition of the reserves backing USDT.

“Starting immediately, we will begin accepting inbound transfers of USDT to Coinbase Pro. Trading will begin on or after 6 p.m. Pacific Time (PT) Monday April 26, if liquidity conditions are met. Please note that Coinbase only supports ERC-20 USDT,” the announcement said.

The exchange will begin supporting trading against its order books after it has sufficient supply, with trading commencing in its usual post-only, limit-only and full trading phases.

“If at any point one of the new order books does not meet our assessment for a healthy and orderly market, we may keep the book in one state for a longer period of time or suspend trading as per our Trading Rules,” the blog post said.

While Coinbase Pro listed USDT, it’s unclear if or when the token will come to its consumer application. Typically, tokens listed on the professional platform are added to the retail side within a few days.

The move also follows a tough week for bitcoin (BTC, -4.25%), which has fallen 18% since Saturday. For the year to date, however, the bellwether cryptocurrency is still up a fulsome 75%.

As the largest stablecoin, USDT serves as integral plumbing for the $2 trillion global cryptocurrency market, allowing traders to easily shift dollars (or a good-enough substitute) between exchanges in order to capture arbitrage opportunities.

UPDATE (April 22, 23:50 UTC): Added context about bitcoin price and USDT’s systemic role and history.

Cryptocurrency derivatives platform Delta Exchange has introduced a feature it says will help generate passive income for its users through the use of automated call options.

Delta claims that its “Enhanced Yield Product” will simplify the process of bitcoin (BTC, -4.25%) and ether (ETH, -6.06%) options trading, according to a press release Delta Exchange shared with CoinDesk on Thursday,

Options allow traders to buy or sell a security at a specified strike price before or on a given date. The strike price in derivatives market terms is a set price at which the owner of the option can buy or sell the underlying asset, in this case, bitcoin or ether.

Singapore-based Delta Exchange said in the same way exchange-traded funds simplify crypto exposure, investors won’t need to learn or experiment with complex options strategies as they can select from a menu as they see fit.

“This product is focused on helping investors participate in more complex options strategies without having to execute them,” Delta CEO Pankaj Balani said. “It is focused on generating high yields with passive management.”

If the price of an asset is greater than the strike of the option being shorted, then a user’s bitcoin is sold automatically at the strike price, allowing the user to pocket the difference.

Conversely, when a user’s option contract expires and the price of bitcoin is less than the strike price, the automated strategy doesn’t sell the asset and the client retains his or her bitcoin. That allows users to avoid high-risk situations and results in earnings, the exchange said.

“As the options markets continue to mature, we believe structured products will become a viable option for all traders,” Balani said.

The Labor Department reported Wednesday that ​​the consumer price index posted a 0.5% month-to-month gain, compared with a 0.9% increase in June. The price rose 5.4% from the year-ago level. 

Despite cooler – but still high – inflation data in July and the U.S. Senate’s passage of a $1 trillion infrastructure bill that could impose certain taxes and restrictions on the cryptocurrency sector, bitcoin’s price climbed to $46,502 on Wednesday, its highest level since mid-May, with retail investors returning to the market. The cryptocurrency was trading at $46,433 as of press time, up 2.45% on the day. 

“The market isn’t expecting the language in the Senate bill to progress as is through the House and into law, which I also agree with,”  Jeffery Wang, head of Americas at crypto services Amber Group, wrote to CoinDesk in an email. “I think once all is said and done, we will have more palatable rules for the crypto industry.”

Latest prices

Cryptocurrencies:

• Bitcoin (BTC) $46,566, +2.1%
• Ether (ETH) $3255.7, +3.2%

Traditional markets:

• S&P 500: 4447.7, +0.25%
• Gold: $1752.4, +1.35%
• 10-year Treasury yield closed at 1.332%, compared with 1.347% on Tuesday

“Bitcoin has taken a major leg up in the last few weeks. In our past notes we had anticipated a rally till mid of August,” Pankaj Balani, CEO of Delta exchange, wrote in an email to CoinDesk.

“We believe that the market should take a breather here. We expect the price to consolidate for some time in the $40K-$45K range before taking decisive action toward the end of August, early September,” Balani wrote. “The volatility continues to trade rich and there is interest to write the upside beyond 50K for Aug and September.”

Meanwhile, the total cryptocurrency market cap has topped $2 trillion for the first time since May, according to CoinGecko.

Bitcoin traders might be more focused on inflation than crypto taxes

The U.S. Senate’s passage of a $1 trillion infrastructure bill this week with measures considered onerous for the cryptocurrency industry has done little to halt bitcoin’s nearly 60% price rally over the past few weeks.

Maybe that’s because the latest moves by lawmakers in the world’s largest economy illustrate how little appetite there is among top officials to curb the elevated spending that has fueled a run-up in U.S. government debt to unprecedented levels of over $28 trillion.

Crypto traders might be betting that the extra spending could spur inflation, potentially bolstering bitcoin’s appeal as a bulwark against dollar debasement. The Federal Reserve has created trillions of dollars in the wake of the coronavirus pandemic to help absorb the additional U.S. Treasury borrowing; the central bank’s holdings of Treasury bonds has increased by about $3 trillion since early 2020, to $5.3 trillion as of last week.

And despite speculation that the Fed might move to taper its bond purchases of $120 billion per month later this year (including $80 billion a month of U.S. Treasuries), the central bank may need to finance additional government borrowing. The Congressional Budget Office projected in July that budget deficits over the next decade could total $12 trillion, pushing the government’s debt load, expressed as a percentage of gross domestic product, to 106%, by 2031. A decade ago, that ratio stood at just 63%.

The CBO has said that the bipartisan infrastructure bill could swell projected deficits over the next decade by an additional $256 billion. That’s equivalent to another four months of Fed Treasury purchases at the current pace.

And there may be additional upward pressure on budget deficits after the Democratic-led Senate on Wednesday approved a $3.5 trillion budget framework with provisions for extra spending on family services, health and environment programs. According to the New York Times, the effort could “create the largest expansion of the federal safety net in nearly six decades.”

Much of that has been in the works for a while. Last year, bitcoin’s price quadrupled as then- presidential candidate Joe Biden defeated President Donald Trump in a Democratic government takeover billed as the “Blue wave.” But there’s a growing sense now that U.S. finances might be reaching a point of no return.

“You’re putting in motion a government that nobody’s grandchild can ever afford to pay,” said U.S. Sen. Lindsey Graham, a South Carolina Republican, according to the New York Times.

Based on the recent years’ trend, the Federal Reserve might end up paying for a lot of it by printing money.

Speaking of inflation…

The U.S. consumer price index jumped by 5.4% in the 12 months through July, the same pace as June and slightly exceeding the 5.3% increase expected by economists, the Labor Department reported Wednesday.

Despite the latest 12-month increase being on par with the fastest inflation in more than a decade, some analysts saw the stabilization as a sign that price pressures from the economy’s reopening might be easing.

“While I don’t think a small decline is a game changer, as far as monetary policy is concerned, it may have been had we continued to see an acceleration, or evidence of more worrying price pressures. Instead, we can all breathe a little easier,” Craig Erlam, senior market analyst for the brokerage firm Oanda, wrote in an email.

The July CPI report isn’t likely to have a major influence on the Federal Reserve’s high-level discussions over when and how quickly to start tapering its unprecedented monetary stimulus. In last month’s Federal Market Open Committee (FOMC) press conference, Fed Chairman Jerome Powell noted that the central bank is aiming to make gains in its goal to reach maximum employment before tapering.

Many bitcoin traders closely track headline inflation numbers in the event that the digital asset becomes a hedge against inflation because of its limited supply cap at a time when the dollar might be losing some of its purchasing power.

Hacker giving money back?

An address associated with the hacker who drained Poly Network of potentially hundreds of millions of dollars on Tuesday has started to return the funds, CoinDesk’s Eliza Gkritsi reports.

The transfers came after Poly Network first agitated for the blacklisting of the exploiter’s wallet addresses and then set up multi-signature addresses to receive any returned funds.  

One surprise is that the news of the exploit didn’t rattle digital-asset markets too much. 

“Reports late last night of a $600m hack have done nothing to shake sentiment in the cryptocurrency space, despite it being the largest hack in history,” Oanda’s Erlam wrote. “While a massive story, it seems traders aren’t concerned, something that perhaps we wouldn’t have seen a few years ago.”

The blockchain research firm Chainalysis published its own analysis: “While we certainly don’t expect every cryptocurrency hack to end with the attacker returning the stolen funds, in this case, it appears Poly Network will get its money back and has also learned about an important vulnerability its team can now patch up. Ultimately, the ecosystem will be stronger for this,” the report said.    

Altcoin roundup

Cake Wallet Enables Readable Usernames: Unstoppable Domains, a blockchain domain provider, now allows Cake Wallet users to create custom user names for their wallet addresses. Launched in 2018 as the first free and open-source wallet for the privacy coin monero on IOS, Cake Wallet has expanded to include android applications and support for bitcoin, litecoin, ether and Cardano’s ADA. The wallet maintains some of the fundamental features of traditional wallets such as a built-in exchange and support for “fiat view.” Rather than use a 32-bit ambiguous string (on the visible layer at least), Cake Wallet’s 150,000 users will be able to create usernames under the “[NAME].crypto” format.

Ghana to Test CBDC With German Banknote Printer: The Bank of Ghana plans to test a central bank digital currency (CBDC) in partnership with German banknote printer Giesecke & Devrient. The central bank said Wednesday that Giesecke & Devrient will be providing the technology for the currency, the digital cedi. Munich-based Giesecke & Devrient provides banknote and securities printing services as well as cash-handling systems.

Relevant News:

Other Markets

Most digital assets on CoinDesk 20 ended up higher on Wednesday. In fact everything was in the green except for dollar-linked stablecoins.

Notable winners of 21:00 UTC (4:00 p.m. ET):

xrp (XRP) +30.4%

polygon (MATIC) +21.9%

cardano (ADA) +17.6%

Chatter about the largest hack in decentralized finance (DeFi) history has only elevated, after the attacker or attackers returned at least $342 million worth of drained funds back to Poly Network, the DeFi platform that was hacked.

Now the crypto community is raising moral questions about how involved centralized players such as Binance and Circle should be when it comes to limiting monetary damage in the realm of cyberattacks on DeFi platforms. 

Others are asking whether an attacker or attackers like those in Poly Network’s case should be pardoned or even praised as they slowly return funds back to the protocols they preyed upon.

At press time, more than $342 million worth of tokens – including USDC (+0.01%), BUSD, SHIB and FEI – have been returned to Poly Network through the Binance Smart Chain, Ethereum and Polygon blockchains, data show. The attacker or attackers started returning funds at approximately 08:47 UTC on Wednesday, and the latest return came at 19:06 UTC on the same day with roughly $84 million worth of USDC sent back to Poly Network on Polygon.

Centralization vs. decentralization

Despite the fanfare surrounding the attack on Poly Network, some market observers said it showcased the advantage of having at least some degree of centralization in DeFi.

As Tether Chief Technology Officer Paolo Ardoino quickly responded on Twitter that the stablecoin issuer froze about $33 million related to the Poly Network hack, many questioned the inaction from Binance Smart Chain (BSC), which is powered by centralized exchange Binance, and Circle, the company behind dollar-pegged stablecoin USDC.

A BSC spokesperson told CoinDesk that BSC is a “decentralized ecosystem where anyone and everyone can build on,” hinting that BSC cannot do much to roll back DeFi exploits on top of it.

Binance CEO Changpeng Zhao was more philosophical: “Unpopular opinion: nothing is risk free,” he said in a Twitter thread Tuesday, adding:

“While we can't freeze funds on blockchains, if those funds land on our CEX [centralized exchange], we will (try to) freeze them. So, we have a lot of blockchain analysis to do. Nothing is easy. We try.”

The response from Zhao and BSC came in the context of Binance retaining a significant degree of control over BSC. BSC’s security algorithm, known as Proof of Staked Authority (PoSA), is controlled by 21 node operators, who are elected by Binance Coin (BNB) holders. Binance is one of the largest holders of the BNB tokens, and so it still has significant sway over BSC, making the network more centralized than competing blockchains.

Lianfeng Zhang, chief security officer at blockchain security firm SlowMist, told CoinDesk that while BSC has fewer validators, a decision like freezing funds still needs to be voted on by the BSC community and the process can be “troubling and slow.”

Zhang also said that compared with Tether, USDC requires more compliance with little flexibility. Therefore, when an attack like the one on Poly Network occurs, it is almost impossible for Circle to act as fast as Tether did.

Circle didn’t respond to CoinDesk’s requests for comment.

Paxos, the company that jointly administers BUSD with Binance, another dollar-pegged stablecoin that is part of the stolen funds, told CoinDesk it is currently “not doing anything” with blacklisting the involved tokens.

White-hat hacker?

As the attacker or attackers started returning the drained funds, it appears they also had time to conduct a question-and-answer on the Ethereum blockchain.

The attacker or attackers allegedly wrote in one message embedded on a transaction on Ethereum that after spotting the bug on Poly Network, they ended up attacking the platform because they “can trust nobody.”

“I take the responsibility to expose the vulnerability before any insiders [are] hiding and exploiting it,” the message continued.

With the attacker or attackers becoming more engaged with the crypto community and having returned at least part of the funds, some members of the crypto world praised them as so-called white-hat hackers, a type of computer expert who ensures the security of a protocol by identifying and attacking its vulnerabilities.

In the Q&A, the attacker or attackers claimed they thought about informing Poly Network’s staff about the bug but were afraid of a potential “traitor” who could be lured by the amount of money that was up for grabs.

However, according to Ari Redbord, head of legal and government affairs at blockchain intelligence firm TRM Labs, it is still too early to make a conclusion about the motives of the hacker or hackers.

“If it turns out that these attackers did have benign ambitions and that they were testing the infrastructure or testing the defenses of a DeFi protocol, this was not the way to do it,” Redbord, who previously worked in the U.S. Department of the Treasury as a senior advisor on terrorism and financial intelligence, said. 

“Essentially, what you have here is people who lost their belief … hundreds of millions of dollars and potentially life savings [were taken],” he added.

UPDATE (Aug. 11, 21:27 UTC): Adds comments from Paxos.

El creciente control que legisladores y reguladores ejercen sobre los mercados de criptomonedas —incluido el debate sobre impuestos a las criptomonedas incluido en un proyecto de ley estadounidense— puede estar asustando a los inversores minoristas, pero no a los institucionales, según datos de blockchain brindados por Glassnode.  

Estos grandes inversores, representados por transacciones de grandes montos en dólares, impulsaron las ganancias del precio de bitcoin casi 20% desde la semana pasada, según informó la empresa de datos de blockchain con sede en Berlín. Varios analistas afirman que la tendencia muestra que estas instituciones se están centrando más en las ventajas de la criptomoneda que en los posibles obstáculos. 

“Los inversores se fijan más en lo positivo en torno a la regulación que en lo negativo”, dijo Joel Kruger, estratega de criptomonedas en el exchange institucional LMAX Digital, y agregó que el gobierno de Estados Unidos es consciente de que hay una parte del segmento cripto que necesita más clarificación.

Read this article in English.

El volumen de transacciones en la blockchain de Bitcoin con valores de al menos $1 millón ha aumentado un 10% desde principios de agosto y significa casi el 70% del valor total transferido.

Esta métrica de blockchain muestra el aumento de las actividades institucionales en la red de Bitcoin porque “los inversores minoristas rara vez mueven transacciones [con valores de al menos $1 millón] en una escala como para crear tal dominio”, dijo un analista de blockchain en Glassnode que responde al nombre de “Checkmate”.

“El creciente dominio también se correlaciona con las salidas [masivas] de Coinbase desde diciembre de 2020, que también asignamos a probables instituciones estadounidenses”, agregó el analista.

Mientras tanto, las transacciones de pequeño tamaño han disminuido su participación en el mercado general, como se muestra en el siguiente gráfico. Las transacciones valoradas en menos de $1 millón han caído a alrededor del 30-40% del total del mercado, cuando en julio de 2020 representaban el 70% del total.

El reciente optimismo de los inversores institucionales se produce mientras el mercado de criptomonedas sigue los intensos desarrollos políticos y regulatorios en todo el mundo, incluida una disposición de información fiscal de $28 mil millones muy debatida en el proyecto de ley de infraestructura de $1 billón en los Estados Unidos y una ofensiva en Europa y otras regiones contra Binance, el más grande exchange de criptomonedas del mundo por volumen de operaciones. 

A pesar de la posibilidad de una mayor supervisión regulatoria, los inversores institucionales son optimistas sobre el futuro de bitcoin (BTC, -4.25%), según analistas y expertos del sector.

“En general, las instituciones verían con buenos ojos una regulación clara y justa”, dijo Andrew Tu, ejecutivo de la firma de trading cuantitativo Efficient Frontier. “La reciente subida de precios de la última semana ha demostrado que el mercado no reacciona con fuerza a las preocupaciones sobre la regulación, en contraposición a la aprobación real de la legislación”.

En el último desarrollo del proyecto de ley de infraestructura, llevado a cabo el lunes, el senador estadounidense Richard Shelby (R-Ala.) presentó una objeción a una enmienda de acuerdo sobre una disposición de impuestos a las criptomonedas. La enmienda habría eximido a los validadores de transacciones de criptomonedas de una definición ampliada de “broker”.  

Kruger dijo que una mayor regulación ayuda a validar la industria. 

“Esto significa que la industria está siendo reconocida y esto, en última instancia, ayuda a la aceptación y adopción”, dijo Kruger.

Otras personas también dijeron que el mercado de criptomonedas se ha acostumbrado más a las noticias que provienen de los reguladores a medida que la industria madura.

“El mercado de las criptomonedas está muy acostumbrado a las preocupaciones regulatorias; en especial, los poseedores de criptomonedas que llevan mucho tiempo en el mercado y que han visto múltiples ciclos de incertidumbre regulatoria”, dijo Tu.

De hecho, sobre una base media de 14 días, el número promedio de días que cada BTC transaccionado permaneció inactivo o sin moverse ha aumentado ligeramente de 7 a 10 días, según Glassnode, lo que significa que algunos poseedores de bitcoin de largo tiempo no están optando por liquidez en esta etapa.

Los fundamentos del mercado, más fuertes y saludables

En lugar de centrarse en las incertidumbres regulatorias, los inversores institucionales han destacado el fortalecimiento de los fundamentos del mercado de bitcoin como una justificación para su optimismo.

“Las preocupaciones regulatorias no afectan a bitcoin tanto como a otras criptomonedas, y el sentimiento detrás de bitcoin ha estado mostrando signos de cambio desde hace un par de semanas”, dijo Noelle Acheson, jefa de Market Insights en Genesis. (Genesis es propiedad de la empresa matriz de CoinDesk, Digital Currency Group).

Por su parte, la oferta ilíquida de bitcoin, o el saldo en manos de entidades sin liquidez, recientemente alcanzó un récord, lo que significa que la criptomoneda más antigua tiene una debilidad por ese lado.

Las tasas de financiación del mercado de derivados perpetuos han vuelto a ser positivas después de haber sido negativas durante la mayor parte de junio y julio.

Calculada cada ocho horas, la tasa de financiación se refiere al costo de mantener posiciones largas/cortas en el mercado de contratos perpetuos de bitcoin (futuros sin vencimiento). La métrica es utilizada por los exchanges que ofrecen perpetuals para equilibrar el mercado y orientar sus valores hacia el precio al contado.

Una tasa de financiación positiva significa que el mercado está orientado al alza. Mientras tanto, una tasa de financiación negativa implica un posicionamiento de mercado bajista. 

Como informó CoinDesk, el ratio de posiciones abiertas de put-call (compra-venta) de bitcoin también cayó recientemente al nivel más bajo de 2021 debido al aumento de la actividad en las ventas, o apuestas alcistas.

Al cierre de esta edición, bitcoin era negociado a $46.475,04, un 3,26% más que en las últimas 24 horas, según CoinDesk 20.