The US Office of the Comptroller of the Currency (OCC) has established a new fintech office to adapt to technological evolutions in banking, including crypto assets.



The Treasury said the office will add to its knowledge of digital assets, fintech partnerships and other emerging technology models that have an impact on OCC-supervised banks. It will also contribute to oversight of partnerships between traditional institutions and fintech firms.



Prashant Bhardwaj, who has worked in several roles across the financial sector for 30 years, has been appointed the new fintech office's deputy comptroller and chief financial technology officer. His tenure begins April 10.



“To ensure that the federal banking system is safe, sound, and fair today and well into the future, we need to have a deep understanding of financial technology and the financial technology landscape,” Michael Hsu, acting comptroller of the currency, said in a statement. 



The OCC is a department under the Treasury in charge of executing laws relevant to national banks. Some of its powers include supervisory actions against banks, removal of bank directors and rejecting applications for new bank branches.



Hsu has previously urged the crypto industry to introduce stablecoin standards in the same vein as the World Wide Web Consortium and Internet Engineering Task Force’s approaches to guiding internet development.



In December, the OCC reiterated its stance on taking a cautious approach to crypto, pointing to various events that roiled digital asset markets in 2022. 



One year earlier, Hsu had issued a reminder to federal savings associations and national banks to not participate in “certain cryptocurrency, distributed ledger, and stablecoin activities” without a non-objection notice from their regulatory supervisors.



“The events of this year in the crypto industry have revealed a high degree of interconnectedness between certain crypto participants through a variety of opaque

Fresh OCC 'Fintech Office' Tasked With Keeping Up With Crypto

SEC Chair Gary Gensler voiced his support of President Joe Biden’s request to fund his agency to the tune of $2.4 billion, claiming the funding would go a long way to taming the “wild west” of the crypto markets.



“I am pleased to support the President’s [financial year] 2024 request of $2.436 billion for the SEC, to put us on a better track for the future,” Gensler said during a House Financial Services subcommittee hearing.



Rapid technological innovation in the financial markets, particularly crypto, has led to misconduct in emerging areas, he added in his published remarks.



Critics argue the agency, under Gensler, has unfairly targeted the industry, which has led to a series of high-profile enforcement actions through litigation — most recently with crypto exchange Coinbase’s receipt of a Wells notice earlier this month. 



The regulator is alleging Coinbase violated US securities through its spot market, staking service, Coinbase Prime and Coinbase Wallet. Weeks prior, rival exchange Kraken agreed to settle with the SEC for $30 million over similar allegations, without admitting wrongdoing.



The funding, if approved by Congress, would allow the agency to double its headcount, allowing the division handling crypto affairs “to investigate misconduct on a larger scale.”



“Addressing this requires new tools, expertise and resources,” Gensler said. It would also speed up the pace of enforcement investigation through “resolutions.”



The SEC did not immediately respond to a request for comment.



“These additional resources would strengthen the division’s ability to protect American families by addressing risks in the crypto markets, cyber and information security, and the resiliency of critical market infrastructure,” he said.



Crypto is “rife with noncompliance,” Gensler added, seemingly ignoring Coinbase’s accusation it has attempted to engage with the regulator on multiple occasions for a clear path to

Gensler Cheers $2.4B Funding Proposal for SEC in Biden Budget

The world’s largest asset manager, BlackRock, said Thursday it believes the US Federal Reserve would continue its campaign of future rate hikes, despite market expectations of a freeze.



It could mean a volatile road lies ahead for digital assets in the short-term, based on prior performances throughout 2021 and 2022 and present-day announcements from the central bank, experts say.



Bitcoin (BTC), which has so far managed to climb a wall of worry in the wake of the Fed’s aggressive rate hikes, benefited from uncertainty in the banking sector as investors sought to hedge via a flight to quality. 



The biggest headwinds now facing the US and global economy are not immediate, Dmitry Lapidus, of crypto-native investment fund Dragonfly, told Blockworks.



The Fed “did a great job bailing the banks out” and the effect on GDP is likely to be exaggerated for the remainder of the year, he said.



“I think they cluster somewhere around Q3/Q4 when excess savings are drawn down and housing data is likely to accelerate to the downside.”



Despite the Fed’s recent dovish stance of easing rate hikes, as evidenced by its 25 basis point rise instead of the previously anticipated 50, market uncertainty still lingers.



Lapidus said for crypto, “it’s tough to decouple” from the macroeconomic environment, with the “pain trade” continuing to be up in all risk assets as long as liquidity was supported.



In the near term, he predicts the trend of higher prices for digital assets to continue.



Future rate hikes?



The Federal Reserve will next convene to determine short-term interest rates on May 3, with analysts predicting a split chance between a 25 bps increase or the decision to maintain current rates, data from CME Group’s FedWatch tool shows.



BlackRock believes the central bank will avoid rate cuts this year and opt to continue curbing inflation, albeit at a less aggressive pace than the year prior. Lapidus agrees, pointing to 

BlackRock Predicts More Rate Hikes, Possible Short-Term Volatility for Crypto

A new MIT masters thesis from a US Space Force major contends bitcoin is not just a form of internet money — but a weapon to be utilized by the Pentagon in modern warfare.



In an exhaustive 400-page dissertation, Major Jason Lowery claims bitcoin’s proof-of-work consensus mechanism presents a massive shift in the way world powers could wage war.



Instead of boots on the ground or nukes in the air, Lowery suggests nations battle by competing for Bitcoin block rewards, Politico reported Thursday.



“Space Force” is the newest brand of the US Armed Forces, created in December 2019. It's responsible for organizing, training and equipping military persons across the stars in a bid to protect US and allied interests.



Lowery is an active-duty US Space Force astronautical engineer and US National Defense Fellow at MIT whose job it is to advise senior military personnel on the implications of bitcoin, according to a bio of his latest book. Politico says it confirmed his rank with an Air Force spokesperson.



Lowery's thesis was released as a book in February under the title "Softwar: A Novel Theory on Power Projection and the National Strategic Significance of Bitcoin." It's said to describe a scenario in which governments duke it out with hashrate; fighting something akin to a Cold War, where the spoils are bitcoin and bragging rights.



The blurb reads:



"Using scientific concepts from biology, evolution, anthropology, political science, and computer theory, Lowery summarizes the dynamics of power projection in human society and provides an argument for why emerging proof-of-work technologies (namely Bitcoin) will have a dramatic impact on how humans organize, cooperate, and compete on a global scale by empowering populations to project physical power in, from, and through cyberspace."



Bitcoin’s consensus could also be harnessed to deter denial-of-service attacks, Lowery reportedly reasons, which would make it costly and therefore prohibitive for

Pentagon, Mine Bitcoin To Stay Superpower: Space Force Major

The CFTC’s crackdown on Binance found US institutions have allegedly been interacting with the exchange, and market research shows liquidity depth may have been the main attraction. 



Binance, the world’s largest crypto exchange, long maintained the top spot in terms of trading volume and market share, but institutions may have been drawn to it for another reason: liquidity options. 



“Liquidity is paramount in crypto, particularly for institutions that are building or selling large positions or trading frequently,” research analysts at Kaiko wrote in a note. “On this front, Binance again scores well, with spreads 36 times tighter than Binance.US and 8 times tighter than Coinbase as of this writing.”



Binance trading volume has traditionally suggested the majority of traders were in the US, considering US trading hours have been the most bustling times for trades executed on the platform. Year-to-date, 43.4% of Binance’s bitcoin (BTC) trading volume has occurred during hours, just below Coinbase’s 47.5%.



“Unsurprisingly, Binance has the tightest spread for both BTC-USDT and ETH-USDT,” researchers said. 



Radix Trading, a Chicago-based firm, identified itself as one of the three entities named in the CFTC’s complaint; “trading firm A,” the Wall Street Journal reported Wednesday. The firm had to use offshore accounts to avoid restrictions, but the trouble could have been worth it, industry members say. 



The lawsuit could impact liquidity options for the rest of the market.



“This could negatively impact market liquidity, which is already unusually thin,” said Noelle Acheson, author of Crypto is Macro Now and former head of market insights at Genesis. “The suit mentions a few large US trading desks that have been actively avoiding US regulations when dealing with Binance – these could end up temporarily laying low for a while.”




Get the day’s top crypto news and insights delivered to your email every evening.

Why Binance May Have Been Worth Risk for US Institutions 

Badger DAO plans to bring a synthetic bitcoin onto Ethereum through liquid staking derivatives.



The aim of the new cryptoasset, Dubbed eBTC, is to become one of the most decentralized synthetic bitcoin (BTC) assets in the market backed solely by liquid-staked ether (ETH) and reliant on immutable smart contracts.



There’s historically been a difficult environment to drive consistent utility and yield sources for bitcoin assets on Ethereum, Badger DAO’s head of marketing, who goes by Will, told Blockworks. 



Assets such as wBTC are in the custody of centralized entities. By comparison, liquid staking derivatives (LSDs) on Ethereum have driven a consistent, sustainable source of yield, and Badger hopes to tap the asset to build a bitcoin primitive on Ethereum that does not require bridging or wrapping.



“Your native bitcoin can stay on Bitcoin and you can play around, speculate and hold a decentralized bitcoin on Ethereum,” Will said. 



Fewer censorship risks than wBTC



As it stands, wBTC is one of the most commonly used forms of BTC on Ethereum, but with points of centralization come potential censorship risks.



eBTC, on the other hand, “eliminates the custodial risk as anyone can mint it and at launch, the protocol will be significantly governance minimized with a clear path toward further decentralization and censorship resistance,” according to Will. 



Will said with eBTC, smart contracts will be immutable, and the user’s collateral or debt positions will not be controlled by any governance. Even so, plans for a multisig are still in place, and multisig governance will operate through BadgerDAO that can adjust the yield share fee earned from staked ETH collateral. 



Read more: What Are Multisig Wallets?



“This is in direct contrast to many existing CDP systems and on-chain money markets that constantly need to adjust their risk parameters such as minimum collateralization ratio or others that have upgrade rights to the

A New Synthetic Bitcoin Is Coming to Ethereum

Though one of the largest public bitcoin miners suffered a net loss of $687 million in 2022, Marathon Digital’s CEO says it remains on track to more than double its hash rate in the next few months and expand to a new region.



Marathon Digital’s deficit last year sprinted up from a $37 million loss in 2021. The company attributed the higher shortfall, in part, to “unfavorable variances” in a company announcement earlier this month.



A total of $651 million of the losses were unrelated to business operations, Marathon CEO Fred Thiel told Blockworks in an interview. They came in the form of impairment charges on the company’s mining rigs and digital assets — incurred when the value of an asset falls below the cost at which it was purchased.



Analysts at Compass Point Research and Trading maintained its buy rating of the stock in a research note last week, noting that it excludes non-cash impairments in its estimates.



Marathon’s stock price was $7.83 at 1:00 pm ET on Thursday — down about 1.5% on the day.



Compass Point lowered its price target from $11.50 to $10, as analysts expect the company’s share count to increase and bitcoin holdings to decrease. Marathon sold 650 of the 683 bitcoins it produced in February for operating expenses — a practice the company expects to continue, according to Thiel. 



Hash rate growth, moving into UAE



The Florida-based miner is on track to fulfill its hash rate growth target from 9.5 exahashes (EH), as of Feb. 28, to 23 EH by mid-year, Thiel said.



It energized about 19,000 bitcoin miners last month, including 8,000 S19 XPs, Bitmain’s most recent ASIC hardware release in July 2022.



Not included in the expected 23 EH of computing power is Marathon’s upcoming entrance into the United Arab Emirates. The company revealed a joint venture with FS Innovation to build and operate two crypto mining sites in Abu Dhabi — amounting to 250 megawatts.



Thiel called the expansion the firm’s

Marathon CEO: ‘Diversity in Site Mix’ Is Key to Future Growth

Crypto and institutions go together like lightning and thunder these days. Traditional finance shops are moving over, while the digital asset market births debutants all by itself.



This brings about two problems:




How do institutions — which are meant to represent the smart money — find market moving information before markets move?



How can they share that information with clients while remaining compliant with strict data security controls?




The Tie, a crypto-native data platform, is gunning to solve both concerns. In the same vein as Bloomberg Terminal, the firm’s crypto-only terminal platform serves as an all-in-one screener for news, market data, regulatory filings, analytics and research. 



The startup, founded in 2017, says it has attracted more than 150 hedge funds, asset managers, venture capital firms, over-the-counter desks, market makers and the like (and even news organizations such as Blockworks).



It’s common for such firms to rely on encrypted messaging apps such as WhatsApp, Signal or Telegram — but regulators have recently handed out billions of dollars in fines for communicating about trades or other orders via platforms that don’t preserve business records, a key SEC requirement.



Those firms require chat histories to be stored and logged in a compliant manner, and until recently, they haven’t had a way to communicate with their counterparties from within the terminal.



“The roll-out of The Tie Terminal Messenger enables firms like ours to take advantage of [the digital asset investor network] and compliantly communicate with a range of leading market participants including banks, asset managers, funds, and liquidity providers,” Rob Hadick, general partner at Dragonfly Capital, said in a statement.







There are other firms shooting for the same market. Aurox, for one, is a free terminal service intended to support fast-moving crypto traders, but its offerings are more skewed towards retail investors,

Institutions Are Going Crypto — But How Do They Share Info?

There’s nothing more some in the crypto industry would like than to seize upon the failures of Silicon Valley Bank, Signature Bank and Silvergate to sow distrust of traditional financial institutions. And while it doesn’t seem these banks did anything illegal at this juncture, the events may indicate a broader, perhaps industry-wide, failure. In fact, a recent report suggests that at least 190 additional banks in the US are currently in danger of uninsured market runs (similar to that of SVB and Signature). 



Despite the crisis, traditional banks are in many ways still far better equipped to provide crypto services than their crypto counterparts are. First, banks are skilled at taking custody of assets in a manner that is secure and compliant with regulation. Second, banks, in many cases, are still considered to be more trustworthy and transparent than their crypto-native counterparts. And third (most importantly), traditional banks can offer more diversified portfolio management, straddling both the crypto and fiat domains. All three points here give banks a definite leg-up in providing digital asset services to retail and institutional investors alike.



A deep, dark void of trust 



The hacks, insolvencies and crashing crypto valuations that characterized 2022 have eroded consumer trust and confidence in crypto to its lowest levels in years. Believers and skeptics alike have had their faith severely tested. Increasingly, both critics and crypto natives are calling for more regulation and oversight. Industry thought leaders and exchange CEOs are all urging for self-custody. With a general lack of trust for all things crypto native — and in particular centralized exchanges (CEX) — a major void has formed within the industry.



Up until now, the market has virtually been monopolized by crypto-native companies. Financial institutions have been slow to keep pace with their crypto-native counterparts. In fact, a recent survey by Celent found that 65

Crypto Custody Has a Problem and Only Banks Have a Solution

Binance was sued by the Commodity Futures Trading Commission this week for allegedly evading trading and derivatives rules. 



The crypto exchange operated without proper registration and illegally allowed Americans to trade crypto derivatives on its platform, according to the regulator. Binance called the CFTC’s complaint “unexpected and disappointing,” saying it had worked collaboratively with the agency for more than two years.



CEO Changpeng Zhao himself said that the lawsuit contained an “incomplete recitation of facts” and that the company does not agree with the CFTC’s depiction of several concerns raised.



But what’s interesting to note is that the exchange was hit with an exhaustive list of allegations, despite having a solid team with expertise in financial crimes.



It appears to be a question of timing, as much of the conduct at issue took place before Binance dramatically ramped up its compliance efforts, according to Leo Mizuhara, CEO of DeFi asset management platform Hashnote.



“If you broke the law in 2019, then it doesn’t matter that you reformed your behavior in subsequent years,” Mizuhara told Blockworks.



‘A’ for effort Binance, but…



Binance’s efforts do count for something in the eyes of regulators, per Dave Weisberger, CEO of algorithm-trading platform CoinRoutes.



“The CFTC does care that Binance has hired a global team of compliance experts — but it’s more complicated than this,” Weisberger told Blockworks. “Both the CFTC and SEC consider actions against organizations for previous actions important for deterring future bad behavior.”



Binance can argue that it already has taken steps to beef up compliance, pointing to recent history.



In Sept. 2021, Binance hired Nils Anderson-Röed, a former dark web specialist at Interpol, to lead investigations into offenders trying to commit crimes on the exchange. 



Around the same time, Tigran Gambaryan, a former special agent with the

Binance Compliance Hires Didn’t Allay CFTC Investigators’ Concerns

The rapid adoption of bitcoin and cryptocurrencies as an asset class unlocks several opportunities for investors. One such opportunity involves using these digital assets as collateral for loans directly tied to their underlying value. 



Bitcoin and crypto loans give investors access to cash to meet their immediate needs, all while retaining any potential upside on the cryptocurrencies they hold. However, these loans are not risk-free, as evidenced by the billions of dollars lost by crypto investors in 2022 while lending assets to crypto loan platforms.



This article demystifies the concept of bitcoin and crypto loans. Readers will learn the benefits and risks of crypto loans, the options available, and answers to frequently asked questions about crypto loans. We first address some common reasons investors may consider getting a crypto loan.



Why get a crypto loan



A cryptocurrency-backed loan is desirable for several reasons. The most obvious is that it gives investors access to cash without liquidating their cryptocurrency portfolio. Individuals may borrow against their crypto to finance major expenses such as paying off mortgages or buying a car.



Others may get a cryptocurrency loan to leverage their position and acquire more crypto assets. In a typical example, an investor may use 20% of their crypto portfolio to borrow US dollars and spend the borrowed amount on buying more cryptocurrency. 



The ideal scenario is that the move pays off, upon which the investor can spend realized gains on repaying the initial loan and retaining the rest as profits. However, they may also incur losses if the value of the collateral asset(s) drops substantially during the loan duration.



A crypto loan allows investors to tap into a credit line without spending capital. It becomes unsurprising then that several centralized and decentralized products with crypto loan offerings have attracted a significant user base for these loans.



Types of crypto

The Investor’s Guide to Bitcoin and Crypto Loans

Bitcoin and ether may be cryptocurrencies built atop public blockchains, but that’s really where their similarities end. 



Yet they trade in almost exactly the same way — their prices move increasingly in tandem to near complete correlation. And they’ve been tightening ever since ether (ETH) started trading almost eight years ago. 



Across 2016 and 2017, bitcoin’s 100-day correlation with ether averaged at 35% (where 100% indicates complete correlation, -100% being complete inverse correlation). That number jumped to 66% across 2018 and 77% in 2019, before reaching more than 87% last year.



So far this year, bitcoin (BTC) and ether’s correlation coefficient has averaged out to 98%. So, whatever bitcoin does — ether does too, with near perfect precision.



But why is their correlation increasing, and not decreasing? Their value propositions are quite different. 



Read more: The Investor’s Guide to Crypto Correlation



Bitcoin is a pure-play decentralized cash system that doubles as a store of value. Bitcoin’s famous 21-million supply limit promotes scarcity in the vein of Austrian economics — that commodities should back currencies rather than the state. 



Ethereum, on the other hand, supports an array of use-cases outside of the strict money doctrine: digital collectibles, prediction markets, metaverse communities and blockchain gaming.



ETH has no supply limit, with issuance and burn rates more elastic, tied to network usage.





All lines are leading to complete correlation.



Dessislava Aubert, a Kaiko research analyst, told Blockworks that macro investors tend to group bitcoin and ether together as risk assets (or crypto more generally), leading them to treat the two in a similar manner.



“This could explain why they are highly correlated, especially during periods of market turmoil when investors tend to be less discerning,” Aubert said. “However, as these assets mature, and their fundamental differences become clearer