First Mover Asia: Bitcoin Slides; Mixed Crypto Legacy in Hong Kong for the FCA’s Incoming CEO
By Sam Reynolds, Bradley Keoun, Greg Ahlstrand
Bitcoin slides for third day, heads back down toward $20K.
Prices: Bitcoin (BTC) slides for a third day, once again threatening to fall below the crucial $20K mark.
Insights: Ashley Alder’s mixed crypto legacy in Hong Kong does not bode well for the industry in the U.K.
Prices
Bitcoin (BTC): $20,824, -3.5%
Ether (ETH): $1,165, -4.2%
Biggest Gainers
| Asset | Ticker | Returns | DACS Sector |
|---|---|---|---|
| Terra | LUNA | +0.2% | Smart Contract Platform |
Biggest Losers
| Asset | Ticker | Returns | DACS Sector |
|---|---|---|---|
| Polkadot | DOT | −6.1% | Smart Contract Platform |
| XRP | XRP | −5.7% | Currency |
| Chainlink | LINK | −5.4% | Computing |
The week ahead: U.S. inflation report due; economists assess impact of Abe assassination
Crypto markets weakened over the weekend, with bitcoin sliding for a third straight day and falling back toward $20,000 as of press time on Sunday.
Some analysts are now pinning $17,000 as a key market support level.
“We continue to expect choppy price action,” said Joe DiPasquale, CEO of BitBull Capital, in an email. “More strong bidding around the $17K level, if bitcoin falls there again, will be a strong signal for the bulls and may indicate the formation of a potential bottom around that price.”
Traders this week will be watching for the latest U.S. consumer price index reading, expected Wednesday. The report could influence market expectations over the Federal Reserve’s next move, at a meeting later this month; as of the last reading, inflation was at its fastest in four decades.
One point of consideration: This past Friday’s report on U.S. jobs growth in June has alleviated some concerns that the country is already in a recession; that should make it easier for the Federal Reserve to proceed with interest-rate increases of 75 basis points (0.75 percentage point), or three times as fast as in past rate-hiking cycles.
As CoinDesk’s George Kaloudis wrote Sunday in his Crypto Long & Short column: “A 75 basis point increase to interest rates in July is basically a foregone conclusion at this point.”
And Oanda Senior Market Analyst Ed Moya wrote last week: “If inflation delivers another upside surprise, the September meeting could see expectations fully priced in a half-point rate increase but that could easily go up to 75 basis-points.”
Bank of Japan watchers are assessing what the assassination of former Japanese Prime Minister Shinzo Abe might imply for the nation’s monetary policy, according to Bloomberg. Abe had been a strong advocate for ultra-easy financial conditions in the face of the country’s economic stagnation.
Markets
*Friday July, 8:
S&P 500: 3,899 -0.8%
DJIA: 31,338 -0.1%
Nasdaq: 11,365 -0.1%
Gold: $1,741 -1.3%
Insights
Ashley Alder’s Mixed Crypto Legacy in Hong Kong
By Sam Reynolds
The U.K’s Financial Conduct Authority (FCA), the nation’s financial watchdog, announced Friday that Ashley Alder, the CEO of Hong Kong’s Securities and Futures Commission, will assume the post of chair in January 2023.
While Adler has a long list of accomplishments regulating Hong Kong’s traditional finance securities market, his curriculum vitae isn’t as stellar when dealing with crypto.
Certainly part of that is out of his control. As CoinDesk previously reported, the “long shadow” of China hangs over Hong Kong. China’s prohibition on crypto trading and Beijing’s fast erosion of Hong Kong’s separate and autonomous legal system has chilled interest in the industry, and forced what interest there is into the narrow licensing regime that does exist.
Secondly, any exchange that serves Hong Kong, even if located abroad, would need to comply with these same licensing requirements.
Treated as a Security
Perhaps the bigger issue with the SFC’s treatment of crypto is the regulator treats it as a security. This is especially going against the grain when global regulatory trends have backed away from treating all crypto as securities and are only looking for specific instances instead.
The SFC’s bill requires exchanges to hold a “Type 1” license, which is used for dealing in securities.
Hex Trust’s Alessio Quaglini has complained before that requiring this sort of license is akin to forcing a square peg into a round hole because of the uniqueness of the digital assets industry. Hex has been awarded licenses in both Singapore and Dubai with the intent to open more offices abroad.
So while Alder’s TradFi regime saw Hong Kong lauded as one of the world’s freest economies by libertarian-leaning think tanks, that same assessment can’t be made for the future of finance. FTX voted with its feet and left the city, and only one firm, OSL, has bothered to get the license.
It’s not yet known who will replace Alder, but it’s unlikely to be someone who wants to take a balanced and fair approach to crypto.
