BTC is hovering around $27K after the CFTC’s move on Binance

It’s the CFTC for liquidity

Good morning. Bitcoin begins the Asian business day down 3.8% to $26,958 after the US Commodity Futures Trading Commission (CFTC) sued cryptocurrency exchange Binance and founder Changpeng Zhao, alleging it offered crypto derivatives not registered in the US.

Binance’s BNB token dropped 5.9% to $308 due to the allegations.

The question on traders’ minds is how much continued interest Binance is now that the CFTC has hit. On the one hand, the CEO of Binance called the CFTC complaint “unexpected and disappointing,” however, in February, the exchange said it was willing to pay financial penalties to “compensate” for past sins.

At the same time, there is some debate about how much traders ignore CFTC claims versus how much Bitcoin can react to the news due to lack of liquidity.

“When you have low liquidity, you tend to have very quiet markets,” Dan Gunsberg, Solana-based co-founder of derivatives liquidity protocol Hxro, said during an appearance on CoinDesk TV recently. “You get these jumps in the market and these voids in liquidity, where things move to a new price and immediately settle down again.”

At the same time as CFTC going after Binance, the decentralization narrative continues.

Decentralized derivatives exchange token GMX is up 4% over the past 24 hours, roughly paralleling how decentralized liquid ether platform tokens soared in February when the US Securities and Exchange Commission sought to bet.

Chinese banks’ push into Hong Kong’s crypto business is facing headwinds

The Hong Kong subsidiaries of Chinese state-owned banks — semi-autonomous entities that operate under Hong Kong rules — have been actively courting crypto businesses, in anticipation of the first phase of the SAR’s regulatory framework in June. But opening an account with them is quite another.

Bloomberg reported on Monday That the banks that make the stadiums have got the green light from Beijing and its headquarters.

Asked by bank sales reps or making incoming inquiries, sources from several Hong Kong crypto companies say account opening standards are onerous and Know Your Customer (KYC)/AML) longer than opening a normal business account.

For example, banks prefer that crypto company executives and key employees reside in Hong Kong. It would be a clear prohibition if they are a citizen of mainland China or a US citizen. If the company is owned by a parent company based in Singapore, that company will need to be an entity authorized by the Monetary Authority of Singapore.

Sources have also been told to expect a lengthy account opening process.

These banks, such as Bank of China and Bank of Communications, are Some of the largest in the worldand it would have been inconceivable a few years ago that they would actively solicit cryptocurrency businesses given Beijing’s hardline stance on the issue and the general reluctance of major banks to engage with cryptocurrencies.

After all, Silvergate and Signature in the US found their market position for precisely this reason, with analysts saying that the cryptocurrency industry will have a “difficulty finding traditional banks to work with” after its demise. These two banks made and lost their fortunes in cryptocurrency: At the turn of the decade, both were small, unknown banks before adopting cryptocurrency; Silvergate reported $2.12 billion in assets in December 2019 and peaked at $16 billion in December 2021.

Although both Silvergate and Signature have grown significantly during the cryptocurrency boom and institutionalization years, their relatively small size means they have fallen faster than they would if they were larger like some of their peers.

But not everyone thinks this is the first chapter of something new, given the difficult setup process.

“Regulation of digital assets in the city is generally friendly and encourages banks to work with crypto companies, however, at the moment banks still have stringent requirements which makes it difficult for cryptocurrency companies to expand and grow,” said Adrian Wang, founder and CEO of Cryptocurrency. Metalpha, a Hong Kong-based digital asset wealth management firm, told CoinDesk: “We have not yet seen much progress in the banking sector to embrace cryptocurrencies. We hope that will change soon.”

A deal for what’s left of Silicon Valley’s bank has been completed. J. Christopher Giancarlo, Senior Advisor to Willkie Farr & Gallagher and former CFTC Chairman, shared his reaction. In addition, Cathie Wood’s ARK Invest bought $12.6 million in Coinbase shares on Friday. Martin Leinweber, Digital Asset Product Strategist at MarketVector Indexes, shared an analysis of the cryptocurrency markets.