Cryptos sank after the lending arm of crypto investment bank Genesis Global Trading suspended customer withdrawals. Salt further aggravates the situation by pausing customer withdrawals due to the impact of FTX’s bankruptcy. After winning the House Majority, Republicans may change their position on the bills as the need for crypto legislation grows.
The latest blow to cryptocurrency occurred on Wednesday morning when Genesis Global Trading, a crypto investment bank, temporarily banned redemptions and new loan originations, adding to the swiftly growing effects of the collapse of FTX.
Recently, Bitcoin was trading slightly around $16,700, down 1.4% over the previous 24 hours as investors returned to their previous week’s defensive stance. The price of ether was just down 3.7%, trading at around $1,200.
With CEL and UNI both down more than 5%, other significant altcoins were generally in the negative. The price of FTX’s FTT token, which had fallen nearly 4%, was just $1.66, a long way from its peak of around $36 earlier this year.
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Derar Islim, the interim CEO of Genesis, informed customers on a call that the company is looking into options for the loan unit, including finding a new source of liquidity. He added Genesis would explain its strategy to clients the following week.
On its website, Genesis Global Capital states that as of the end of the third quarter of 2022, it has $2.8 billion in total active loans. Digital Currency Group (DCG), which owns Genesis, is also the parent organization of CoinDesk.
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In a further statement, Amanda Cowie, DCG’s vice president of marketing and communications said, “Genesis Global Capital, Genesis’ lending division, made the painful choice to halt redemptions and new loan originations temporarily today.
This choice was made in response to the FTX implosion’s severe market disruption and loss of industry confidence ”
California Suspend Crypto Lender Salt’s License
Meanwhile, Salt’s license was suspended for 30 days, according to the California Department of Financial Protection and Innovation (DFPI), which announced the move on Wednesday. The regulator is looking into Salt’s decision to halt client withdrawals earlier this week.
Salt declared on Tuesday that it was halting client withdrawals and deposits as a result of the impact of the demise of the cryptocurrency exchange FTX.
On Tuesday, Bnk To The Future, an online investment platform, revealed that it had canceled its previously announced non-binding letter of intent to buy Salt because of the latter’s exposure to the FTX.
Last week, the DFPI took a similar measure to suspend BlockFi’s license for likewise stopping withdrawals as a result of the collapse of FTX. According to the department, FTX is also being invested separately.
Optimism From Big Players
The CEO of the biggest cryptocurrency trading website announced on Wednesday that he is creating a recovery fund to aid those working in the field and that everything “will be OK.” Binance CEO Changpeng Zhao stated, “We want the powerful industry players today to defend the good industry players who might merely be affected temporarily.”
“That doesn’t mean we can help everyone, though. We won’t be able to assist a project that has been poorly handled on several levels anyway.
Zhao claimed that cryptocurrencies have “proven remarkable endurance,” indicating that he didn’t anticipate recent business turmoil to have a lasting negative impact. The size of the recovery fund was not given in precise terms by him.
His remarks follow Binance’s withdrawal from an agreement to save rival exchange FTX, which filed for bankruptcy on Friday, barely one week prior.
Crypto Regulations Will Help
As the crypto industry waits for legislation that might determine its future, the U.S. Congress will formally be divided as results give the Republican party a majority in the House of Representatives.
Republicans can now anticipate the appointment of a new speaker of the House and, more significantly for the cryptocurrency sector, new chairpersons of House committees.
Currently, McHenry has already played a significant role in negotiating legislation that could lay out guidelines for stablecoins, tokens that are typically linked to assets like the dollar and are intended to maintain constant values while being used to buy and sell more volatile digital currencies.
Regulations must be modified for this industry, according to Zhao. “While regulation won’t completely solve this, it will lessen it. It’s critical, but we must have realistic expectations, he continued.
Zhao thought about how aspects of conventional finance could assist the bitcoin market to become more regulated and well-trusted, but that procedures would need to be modified to be suitable for the situation.
Updates on The Australian Jobs Report
Compared to the 15.0k jobs predicted by economists, the country gained roughly 32.2k jobs. In the meantime, the unemployment rate decreased from 3.5% in September to 3.4%; forecasts called for a hold at 3.5%.
The labor force participation rate decreased somewhat, falling to 66.5%. Despite overall positive results, the Australian jobs data for October received little attention from the USD/AUD pair.
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Not that long ago, the central bank was aggressively raising interest rates in increments of 50 basis points. That development has since slowed down to 25 each meeting. This translates to possibly a prolonged tightening cycle, although a milder one.
Given that third-quarter inflation was unexpectedly higher, the RBA appears to be advocating for future price pressures to moderate.
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