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What is front-running in crypto and NFT trading?
Front-running is a type of insider trading that affects an asset’s market price. Read this guide to learn how to prevent front-running in crypto.
How to prevent front-running in crypto?
Users can limit front-running by splitting the transaction into many smaller transactions and adjusting the low slippage. Similarly, developers can use anti-front-running measures like making transactions private and using a hidden mempool.
Users can break large transactions into smaller ones instead of executing them all at once, which reduces the appeal of transactions with front-running bots due to the value that can be mined. As a result, bots will pass the transaction instead of front-running it.
When the bot places trades, it will also alter the price; therefore, keeping the adjustment slippage minimal will prevent customers from losing money. On the other hand, adjusting the low slippage can make the transaction more challenging to execute.
SparkPool’s TaiChi network is a private transaction service that helps developers limit front-running in the crypto space. The miner-extractable value (MEV) bot is unable to find transactions on mempool because user transactions are only visible to Sparkpool and not to other Ethereum nodes. MEV is a metric that tells how much money blockchain miners can gain by arbitrarily including, excluding or reordering transactions.
KeeperDAO uses the Hiding Book mempool, which is a secret Mempool. Therefore, the Keeper bot will profit from MEV through arbitrage trading or asset liquidation by passing through transactions and loan requests. MEV revenues are deposited in the ROOK treasury, and users receive a portion of the profits in ROOK tokens. To avoid front-run slippage, these transactions are offered free of charge.
How to detect NFT front-running?
Front running can be identified by monitoring users’ trade data, such as their wallet addresses, purchases followed by sales of NFTs, and a series of fund transfers.
The acquisition or selling of a financial instrument by the front runner, the legitimate transaction, and the front runner’s potential unwinding of the financial instrument to bring the cycle to a close are the three significant data points to consider while detecting front-running in NFTs.
Additionally, analysts should search for buy/sell orders close to an NFT artist’s buy/sell order in the same instrument that impacted the NFT’s price to notice any potential front-running tactics.
Furthermore, the compliance team should be able to use the trade reconstruction capabilities (pulling together different streams of data) to connect unstructured data, such as voice and electronic communications, to the trades to offer context, such as genuine dialogues with buyers (if selling NFTs), to rule out the wrongdoing.
How is wash trading crypto different from front-running tactics?
Wash trading is when an investor sells and buys the same asset to inflate the value of security artificially. On the other hand, a front-running attack on a blockchain occurs when a malicious user discovers a swap transaction after it has been broadcasted but before it has been finalized and reorders transactions to their benefit.
The NFT market is particularly susceptible to a practice known as wash trading. Several NFT trading platforms allow users to trade without identifying themselves by connecting their wallets to the site. This means that a single user can establish many wallets and link them to a platform.
After that, a person can control both sides of an NFT trade, selling it from one wallet and buying it from another. The trade volume increases as numerous similar transactions are completed. As a result, the underlying asset appears to be in high demand.
Similarly, front-running tactics like sandwich attacks focus on exploiting DeFi protocols and services. Sandwiching occurs when two orders are placed, one before and the other after the trade. In this case, the attacker will front-run and back-run simultaneously, sandwiching the original pending transaction in the middle.
A victim trades a cryptocurrency asset X, for example, Cardano (ADA), for another crypto-asset Y, for example, Ether (ETH), which is used to make a significant purchase.
Before the hefty trade is approved, a bot detects the transaction and front-runs the victim by purchasing asset Y, i.e., ETH.
This purchase action increases the slippage (based on the volume to be traded and the available liquidity, projected price increase or fall) and boosts the price of asset-Y for the victim trader. Because of the high purchase of asset Y, its price rises, and the victim purchases asset Y at a higher price, which the attacker then sells at a higher price.
Another way of front-running includes a displacement attack in which the miner’s transaction replaces the original transaction; the replaced transaction can still be completed, but the result will not be as intended.
Is front-running illegal in crypto?
Front running is considered illegal in the traditional stock market because outsiders are not provided with insider information. However, in the crypto market, all information is stored in a publicly auditable digital ledger. Therefore, front-running NFTs is not considered to be illegal.
The internet’s power to disseminate information increases front-running in the cryptocurrency market. While front running is banned in traditional trading because the trader is utilizing non-public data, the trader on a decentralized exchange (DEX) is using data publicly available on the blockchain and is not technically shorting the system.
If you know the list of buy or sell orders ahead of time and can insert your order before other trades are inserted, front-running as a DEX trading strategy is beneficial. The trader will be able to see incoming orders locked into smart contracts on the decentralized exchange if it is built on top of a public blockchain (e.g., Ethereum). The trader can then establish a higher cost for placing the order than the incoming orders if it is commercially feasible. The trader will be able to claim more lucrative orders as a result.
What is a front-running bot?
A front-running bot scans pending transactions and pays a more significant gas fee so that miners process its transaction first to front-run a major trade that will affect market pricing.
Bots are pre-programmed programs that allow you to automate your trading. Rather than keeping track of every move in the market and waiting for a good time to buy and sell, the bot will automatically synthesize and assess market data and make asset transactions on behalf of customers. But, how do crypto front-running bots work?
Ethereum’s or the blockchain’s design permits all submitted transactions to halt in a mempool, where transactions are waiting to be processed. The mempool can be scanned by miners or bots for appropriate transactions to be utilized for front-running in cryptocurrency trading.
Front-runner bots typically work on a millisecond timescale. For example, they may read a transaction from the mempool, compute the optimal transaction size, configure the transactions and then execute them in a fraction of a second. It’s impossible to compete when manually operating.
By putting a buy order on the same block and simultaneously setting a higher gas price, the bot front-runs particular slippage, trade volumes and gas price transactions. When additional liquidity is added to an AMM (automated market maker) pool on the exchange, the front-run bot recognizes it and manipulates the order of transactions within a block to profit from another trader.
What is front-running in the NFT markets?
Front-running is a stock market phrase that refers to using insider information about impending deals to enter the market ahead of the competition. As a result, it’s a type of insider trading.
Front-running is not limited to the stock market and the decentralized finance (DeFi) space — it can happen in the nonfungible token (NFT) marketplaces, too. It occurs because an insider at an NFT platform knows which NFTs are going to be featured heavily on the trading site.
Furthermore, with that knowledge, they can buy an NFT before it gets featured, ultimately raising its price. The price rises because the NFTs are publicized to sell and the insider makes a tidy profit.
Therefore, front-running of this kind is called insider trading, as the assets are traded based on non-public information. For instance, In September 2021, Nate Chastain, the head of product at the NFT marketplace OpenSea, was discovered to have purchased NFTs just before they were highlighted on the OpenSea site. He then sold them for a profit.
He took advantage of insider information, such as which NFTs OpenSea would push, to obtain an unfair advantage. However, an enterprising individual discovered this illegal activity by matching the NFT transaction timestamps to the top page promotions of the NFTs in question on OpenSea.
Loopring (LRC) price surges by 50% after GameStop NFT marketplace integration
Steady ecosystem growth and GameStop’s announcement that Loopring will underpin its NFT marketplace resulted in a double-digit gain for LRC price.
Filling multiple needs within the cryptocurrency community is one way a project can set itself apart from the competition and new attract users and liquidity to its ecosystem.
Loopring aims to do exactly this by aiming to offer a EVM-based solution with low fees where DeFi and NFT developers and investors can transact. The layer-two (L2) scaling solution utilizes zk-Rollups to provide fast, low-cost transactions and the project has been gaining traction throughout the month of March.
Data from Cointelegraph Markets Pro and TradingView shows that the price of LRC gained 57% between March 21 and March 23 as its price increased from $0.78 to $1.23 amidst a spike in its 24-hour trading volume to $2.75 billion.
Three developments that have helped spark the reversal in price for LRC include the beta launch of the GameStop NFT marketplace on the Loopring network, the inflow of new users and a rapidly expanding NFT ecosystem.
GameStop selects Loopring for its upcoming NFT Marketplace
The most significant recent development that helped to drive the increase in demand for LRC was the March 23 announcement that GameStop has integrated the beta version of its NFT marketplace with the Loopring network.
The future of #NFTs are here + they’re powered by #Ethereum‘s second layer
Loopring L2 x @GameStop
Power to the players.
Power to the creators
Power to the collectors.#L222https://t.co/0gdvKLivfp
— Loopring☠️ (@loopringorg) March 23, 2022
GameStop reports that it chose Loopring to host its NFT marketplace due to the network’s ability to mint NFTs for a fraction of the cost required on Ethereum, with the average fee being less than $1.
Beta users can begin exploring the marketplace now and deposit funds in preparation for the platform’s full lauch which is expected to take place in the near future.
Surging user growth
A second factor putting wind in the sails of LRC has been the surge in new users in the Loopring ecosystem as evidenced by the record-high number of wallets joining the netw.
According to data from Dune Analytics, the wallet count of the Loopring network has increased from 6,498 on Oct. 30, 2021 to an all-time high of 27,092 on March 25 as the GameStop announcement helped initiate a new of wave users.
The recent release of the Loopring Smart Wallet, which includes the ability to mint NFTs and retrieve a lost account via social recovery and Guardians, has also helped in the process of onboarding new users and wallets in the ecosystem.
Related: GameStop stock up on rumors of Microsoft NFT game partnership
An expanding ecosystem
A third factor helping to boost the outlook of LRC is the overall growth of its ecosystem which includes a NFT community that has already seen more than 1 million NFTs minted.
Over 1 Million NFTs have been minted on Loopring L2 since the launch of open #NFT minting less than a month ago
Come join our amazing community of Lööpers in the Discord + mint some ultra-secure NFTs on #Ethereum for less than a dollar
— Loopring☠️ (@loopringorg) March 18, 2022
Further evidence of its growth can be found looking at the daily volume traded on Loopring, which experienced a significant spike in activity following the March 23 GameStop announcement.
VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for LRC on March 20, prior to the recent price rise.
The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
As seen in the chart above, the VORTECS™ Score for LRC climbed into the green zone on March 19 and proceeded to hit a high of 88 on March 20, around 40 hours before the price increased 57% over the next two days.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Fed Governor Says ‘Blockchain Is Totally Overrated,’ Claims Crypto Is ‘Just Electronic Gold’
Cryptocurrency vs. Stocks: Key differences explained
Read all about the differences between cryptocurrencies and stocks including the agreements, the risks and the potential.
Stocks or cryptocurrency — Which is safe?
If you are aware of the risks and consciously deal with them, then both stocks and cryptocurrencies are safe to trade with.
Cryptocurrency vs. Stocks: Does one pose more risk than the other? Sure, the crypto market is extremely volatile and new. Stocks are more proven investment instruments but are also highly volatile. There are a lot of people who have a percentage, if not all, of their wealth invested in cryptocurrencies.
It’s not wise to use the crypto market as a quick win. But, there are a lot of coins to earn rapid gains and the risk could also work in your favor instead of going against you.
The most important thing about investing is that you don’t bet money you can’t afford to lose and that you are aware of the risks involved. That risk can be big or small, but you never have any guarantees. Go out and investigate, try things and enjoy the roller coaster ride.
Is cryptocurrency the future?
Cryptocurrency could very well be the future replacement for fiat money, but only time will tell.
The current financial system is fragile and actually outdated. The system no longer meets the needs of consumers, who are increasingly demanding innovative products and enhanced experience. Deutsche Bank’s Imagine 2030 report predicts that over 200 million users will engage with digital currencies by 2030.
While crypto today is still an addition to the standard financial system, it could well be a replacement in the future. Cash is already becoming a rarer phenomenon and being able to access your own digital money anywhere in the world would be a blessing for most users.
Cryptocurrency gives users the option to manage their own money, but this is only the beginning of the possibilities that a new financial system will unlock.
Investing in stocks for beginners
Do your own research and follow the step-by-step plan for buying stocks.
In the crypto market, different investors are active. Some invest for the short-term and sell their coins as soon as the price rises. Then, there are HODLers who choose to commit their money for a longer period. On the stock market, the “quick win” principle is not at all an issue because of, among other things, the benefits of compound interest.
Do you want to start investing in stocks as a beginner? Then, first consider whether you want to compose a portfolio and trade it yourself or whether you want to let a professional manage this process. Have you decided to start investing yourself? Then the step-by-step guide below is a good start:
Investing in cryptocurrency for beginners
Do your own research and follow the step-by-step plan for buying cryptocurrencies.
When you want to start investing in cryptocurrency, you must understand what you’re doing and what you are investing in. You have well-known currencies like Bitcoin (BTC) and Ether (ETH), but there are also a lot of altcoins.
Not all coins have productive value and you need to monitor your portfolio carefully so you can act in time.
“Buy low and sell high” is something to aspire to, but it can turn out quite the opposite for inexperienced traders. With both stocks and crypto, it is important that you do not invest money that you still need because there are always risks involved in investing.
Do you want to start investing in crypto as a beginner? Go through the following steps to get started.
Crypto trading vs. stock trading — How are they different?
Both the crypto and the stock markets are volatile and subject to external influences. However, there are also differences between them.
When we’re talking about cryptocurrency vs. stocks, there is a big difference in how they are traded. Cryptocurrency can be bought at a cryptocurrency exchange, whereas you can buy stocks at the stock exchange. Of course, there are differences in the exchanges and opening hours, as previously described.
Normally, the crypto market is more volatile than the stock market. However, the stock market is also subject to volatility due to interest rate changes and uncertain situations like war, inflation rate and monetary policy changes. But, what about trading costs in cryptocurrency vs. stocks?
Basically, transaction fees do not apply to the crypto market, as it is decentralized. However, you do pay a gas fee to reward the miners and validators who secure transactions on the network.
On the stock market, transaction costs like brokerage fee apply, but you can often trade free of charge within certain platforms like eToro that do not charge any commission for trading stocks.
Are stocks a good investment in 2022?
The stock market is just as unpredictable as the crypto market. Do your own research and be aware of the risks.
No one can look into the future, so you can never be sure with your investments. Equities are interesting for those who want to make long-term investments. We’re living in exciting times, as the economy is affected by many factors in 2022. For instance, the COVID-19 pandemic and the war between Russia and Ukraine resulted in inflation in the market.
Because of this, the stock market is also currently experiencing great volatility alongside the crypto market. It is, therefore, not possible to predict the price of stocks — we will only know when the future is at our doorstep.
If you want to realize a stocks investment, at least immerse yourself in the market forces and economic trends and get well informed. There are no risk-free investments, not even on the stock market.
Is cryptocurrency a good investment in 2022?
If you’re considering investing in cryptocurrencies, you must be familiar with the risks and the benefits of the crypto market.
Whether cryptocurrency is a good investment in 2022 or not is also a subjective topic. There has definitely been a breakthrough on normalizing the crypto market in recent years.
However, it is not yet permitted to use your coins for everyday things such as shopping for groceries or paying rent. Regulation will provide convenience on the one hand, but it also has limitations on the other.
For instance, governments will be able to penetrate the infrastructure, tracing crypto activities more easily. As a result, anonymity decreases and an era of taxing your crypto assets arrives. If you are open to cryptocurrency investment, you should be aware of the risks next to the potential gains.
Does cryptocurrency work like stocks?
Investing in stocks works differently than committing funds to cryptocurrencies. However, both have their advantages and disadvantages.
Both cryptocurrencies and stocks are used to build wealth but the method of investing is completely different, as stated above. When you invest in stocks, you become a certain part owner of a company called a shareholder.
You can buy shares during the opening hours of the stock exchange. If the stock you have invested in performs well, you will also receive a dividend. Dividends may be kept as cash or reinvested in order to accumulate more shares by investors who receive them.
The stock market is incredibly strict in terms of laws and regulations, with all the associated penalties for non-compliance. The crypto market does not have to deal with international laws and regulations and the market is in motion 24/7. There is no ownership when you are active in the crypto market and you do not get paid dividends. Instead, you can lend or stake your tokens to earn passive income.
If you want to start investing in cryptocurrencies, you can do so quite easily. In doing so, digital coins fall outside the control of a central bank, allowing you to complete anonymous transactions at lightning speed and bypassing economic trends such as inflation.
Cryptocurrency vs. stocks — Which is better?
Investing in stocks is the established choice and crypto is a novel form of investment.
It’s a fierce debate among investors. Stocks have been around for centuries and have achieved a certain status of reliability, while cryptocurrencies have only come into inception in recent years.
For seasoned investors, it’s not so much about which one is better but which form of investing aligns with their goals. What kind of results do they want to achieve over what period of time?
Stocks are backed by company assets or physical money, but this is not the case with crypto. The crypto market is young and growing rapidly which means there is great volatility. The question, “Which is better?” is difficult to answer objectively, as it depends on personal motives.
Related: What is a cryptocurrency? A beginners guide to digital currency
CNBC found in 2021 that half of the millionaires already invested at least 25% of their wealth in crypto. Should you invest in stocks or cryptocurrency? That’s all up to you.
Love it or hate it, crypto’s vibe shift is now imminent
Recent geopolitical developments have upended the ethics and self-image of crypto. What does that mean for its future?
Last month, cultural critic Alison P. Davis published an article in The Cut titled “A Vibe Shift is Coming. Will Any of Us Survive It?” The “vibe shift” Davis was referring to had nothing to do with crypto. She was referring to a sea change in pop culture and social trends, particularly in view of GenZ’s ongoing ascendance into trendsetting and cultural relevance. Nevertheless, her positioning caught my eye because she aptly put her finger on something crucial that I’ve also been feeling, particularly as it relates to crypto. The paradigm shift toward the next cultural moment — whatever it is — is perceptible, even if it’s not palpable. We can’t quite make it out, but we know it’s in the room. The concrete conditions haven’t shifted yet, but the vibe most certainly has.
In the days following its publication, “vibe shift” captured Twitter’s attention and, in many cases, its derision. However silly the term, it captures something real and similar happening in the crypto space. Ridiculous as it may initially sound, there’s a vibe shift happening in crypto.
I like the term “vibe shift” because it’s about exactly that: a feeling, a hunch, a mood, a tone, a vibe. Across its brief history, crypto’s vibe shifts have followed changes in the technology itself. Crypto’s initial wild west, anything-goes optimism stemmed from Bitcoin’s (BTC) transition from a peer-to-peer (P2P) payment solution to a store of value, then grew even more manic with the introduction of Ethereum, which demonstrated the potential of smart contracts. This half-manic optimism grew more serious and businesslike as decentralized finance (DeFi) expanded on the back of legitimate level-two networks. The development of nonfungible tokens (NFTs) brought artists and musicians into the fold, not the other way round.
Related: In defense of crypto: Why digital currencies deserve a better reputation
This isn’t a good or a bad thing, it’s just a fact. The technology determines the discourse in DeFi and crypto, meaning that it also dictates the culture. That “this is no longer the case” is an argument you could only make after the actual tech reached a certain level of sophistication and public legitimacy — which is what’s happened with crypto and DeFi. A crypto “vibe shift” is a necessarily new concept, and it’s happening in a particularly interesting way.
How we talk about crypto is changing, in other words, but not in response to the tech itself. People are speaking as if they have more skin in the game and not just because they’ve sunk their own capital into investments. People are thinking bigger about crypto’s role within the wider world, and not just in self-serving terms related to profiting off mainstream adoption.
From profit to politics
Dare I say we’ve gone political? I first noticed it with the Canadian truckers’ protest against vaccine mandates. This issue lit up the crypto space and was not quite over agreement or disagreement with the actual convoy’s goals. Facing a government freeze of traditional assets and being locked out of standard fundraising platforms like GoFundMe, the truckers turned to Bitcoin and raised $900,000 in a matter of days. Subsequent attempts by the Canadian government to lock crypto assets associated with the convoy were only partially successful. After an Ontario Superior Court judge issued an injunction freezing millions of dollars in crypto to the convoy, the crypto community responded with a mix of protestation and bemusement. Multisignature wallet Nunchuck had to respond publicly that, politics aside, they couldn’t provide the subpoenaed information even if they wanted to: “We are a software provider, not a custodial financial intermediary,” and one with no way of seizing its users’ assets at that.
Discomfort with the political positions of the truckers aside, the crackdown nevertheless raised some shackles among our space. The idea (turned reality) that a federal government could seize crypto assets with a court order and on grounds related at least in part to ideology runs against everything this community prides itself on. The Russian invasion of Ukraine only underscored this feeling.
Related: Bitcoin at the barricades: Ottawa, Ukraine and beyond
The cryptonomics of war
A few interesting things happened in the initial days of the Russian invasion. The Ukrainian government requested donations in Bitcoin early (inevitably leading to scammers trying to clone the account for their own benefit), then called for crypto exchanges to freeze Russian accounts. Turning crypto into a safe financial haven and reliable store of value for a country at war was a game-changer, the effects of which we’ll feel for years. Many of these exchanges refused, claiming it would unjustifiably punish ordinary Russian citizens for the actions of their leaders. Some of the biggest names in the space seemed to come down on the side of neutrality, but not without qualification. Vitalik Buterin tweeted notably vaguely about crypto’s neutrality.
Reminder: Ethereum is neutral, but I am not.
— vitalik.eth (@VitalikButerin) February 24, 2022
Beyond that, a land war in Europe has predictably made many of us lose our taste for the latest quirky NFT drop, at least for now — there’s more serious stuff to talk about. And, crypto is actually talking about it. That is the vibe shift, and it’s not happening in response to the technology. It’s happening in response to the real world, and it’s changing the contours of the crypto one. It’s prompting a moral reckoning that cuts to the bone of what crypto is supposed to do and who it’s supposed to be for. It’s about the price of neutrality and what exactly neutrality means.
Related: Every Bitcoin helps: Crypto-fueled relief aid for Ukraine
If crypto has penetrated the real world, the real world is now penetrating crypto. The myopic and divorced-from-reality perspective our detractors accuse us of is wearing off. This vibe shift is making it so difficult to predict what comes next, particularly now that we’re suddenly wrapped up in massive geopolitical stakes. The conversation has changed because the rules of engagement have changed. Crypto is all fun and games and apes until someone starts a war. Or, for that matter, a convoy.
The end of history or the future or crypto?
I remain confident in the future of crypto and DeFi, but it’s going to be a complicated future. The Canadian trucker convoy and the war in Ukraine have become unexpected reckonings with no easy answers and, in many cases, some very unsavory ones. Like most everyone heavily involved in this space, I still believe a huge element of crypto’s hard and soft power is related to its bankless decentralized status removed from the traditional mechanisms of global finance. But, these things are never so simple.
The point of a vibe shift is that what comes next is still opaque. We’re just now waking up to the power of crypto and the enormous implications of a legitimate, censorship-resistant financial infrastructure. What that means for the future and where we go from here is uncertain, and we have more on the line than the cultural denizens of New York City to which the term was originally applied. Self-sovereign money that exists outside of traditional finance’s control is untested in the contexts of geopolitical conflict and culture wars. Whatever happens next is going to change everything.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
White House office seeks public opinion on crypto-climate implications
Following up on a recent executive order signed by President Joe Biden, the OSTP reached out to the general public to identify the energy and climate implications related to digital assets.
The Office of Science and Technology Policy (OSTP), an Executive Office of the President of the United States, commenced a study to identify the scope for offsetting energy use and climate changes related to digital assets.
On March 9, United States President Joe Biden signed an executive order, directing various federal agencies to examine implications of digital assets on six key areas — consumer and investor protection, financial stability, financial inclusion, responsible innovation, the United States’ global financial leadership and combating illicit financial activity.
As a part of the initiative, the OSTP invited the general public and other stakeholders to share their viewpoints on various factors that contribute to the energy use and climate impacts of all types of digital assets and cryptocurrencies.
.@POTUS made clear that digital assets and cryptocurrencies must support our climate goals.
Today, @WHOSTP issued a Request for Information seeking YOUR input on the energy & climate implications of digital assets. Be sure to respond by 5pm ET on May 9. https://t.co/oRLqYHPG9l
— White House Office of Science & Technology Policy (@WHOSTP) March 25, 2022
President Biden’s executive order requires OSTP to submit a report on digital assets to identify factors that negatively or positively affect energy and climate concerns. According to the official notice:
“In particular, this Right for Information (RFI) seeks comments on the protocols, hardware, resources, economics, and other factors that shape the energy use and climate impacts of all types of digital assets.”
In addition, OSTP seeks public opinion on the potential benefits of digital assets in addressing the rising energy and climate concerns. According to the notice, the federal government will use the findings of the study to dictate future developments or industry trajectories related to digital assets.
The general public and organizations are invited to submit comments on or before 5:00 p.m. ET on May 9, 2022.
Related: Secretary Yellen recognizes ‘benefits of crypto’ despite lingering skepticism
The U.S. Secretary of the Treasury Janet Yellen, who has historically shared anti-crypto sentiments, recently acknowledged the “significant role” played by cryptocurrencies:
“There are benefits from crypto, and we recognize that innovations in the payments system can be a healthy thing.”
I see a lot of strength in the American economy. We have an immensely strong job market, historically low unemployment numbers, and consumer spending continues to hold strong. I joined @SquawkCNBC this morning to discuss. pic.twitter.com/NKM1H8fDQC
— Secretary Janet Yellen (@SecYellen) March 25, 2022
Coinbase to track off-platform crypto transfers in Canada, Singapore, Japan
Certain Coinbase users will need to disclose recipient information when sending cryptocurrencies to non-Coinbase wallets.
Citing compliance with local jurisdictions, crypto exchange Coinbase announced to soon collect additional information from users based in Canada, Singapore and Japan.
Effective from April 1, Coinbase users from Canada, Singapore and Japan will be required to provide additional information while sending cryptocurrencies to a different (non-Coinbase) platform.
However, while Singaporean and Japanese investors will be required to share additional information about the recipient for every single off-platform transaction, Canadians sending less than $801 (1,000 CAD) will be exempted from this requirement.
As shown in the above screenshot, Canadian users will need to share the full name and residential address of the recipient.
Moreover, Canadian users — that suffice the above two conditions — will lawfully require to provide the recipient’s (self) information even while transferring funds between their own crypto wallets.
On the other hand, both Japanese and Singaporean regulations will require Coinbase to collect information about the recipients from local investors for every single off-platform transaction with no minimum threshold.
Similar to Canadian users, investors from Japan will need to disclose information including the recipient’s name and full address and the name of the crypto exchange handling the wallet.
Singapore users will not require to provide the recipient’s residential address but will require only the recipient’s name and country of residence. The lack of any required information will bar the user from sending cryptocurrencies out of the Coinbase platform for the jurisdictions in question.
Coinbase users that no longer reside in these jurisdictions will need to update their country of registration in order to gain exemption from the soon-to-be-implemented rule.
Related: Thailand SEC bans crypto payments, seeks disclosure of system failure from exchanges
For many jurisdictions, the road to mainstream crypto adoption is paved by stringent regulations under the pretext of investor protection. Starting April 2022, the Thailand Securities and Exchange Commission (SEC) announced a ban on crypto payments throughout the country.
Complementing this law, the SEC also proposed a new rule, which if implemented, will require Thai-based crypto businesses — brokers, exchanges and dealers — to disclose service quality and IT usage information.
As Cointelegraph reported, a joint study between the Thai SEC and Bank of Thailand (BOT) concluded that:
“[Crypto payments] may affect the stability of the financial system and overall economic system including risks to people and businesses.”
Ethereum price hits $3.2K as anticipation builds ahead of the ‘Merge’
ETH price made a clear trend change and aims for the $3,800 level after traders’ anticipation of the upcoming Merge lures the bulls back to the market.
The week-long uptrend in the cryptocurrency market has begun to awaken bullish crypto investors and the successful March 15 launch of the Ethereum “merge” on the Kiln testnet has the community excited about the upcoming switch to proof-of-stake (POS).
Data from Cointelegraph Markets Pro and TradingView shows that since the successful launch on Kiln, the price of Ether has climbed 25% from $2,500 to a daily high at $3,193 on March 25 as traders look to lock in their positions ahead of the merge.
Here’s a look at what analysts in the market are saying could happen with the price of Ether as the merge approaches and how the switch to POS could affect its price long term.
A clear breakout from the downtrend
The turnaround in Ether price over the past couple of weeks was succinctly addressed by crypto analyst and Justin Bennett, who posted the following chart highlighting the trend reversal that has occurred.
“Ether first higher high since early Nov. 2021. Probably nothing.”
The merge will be a bullish development
A deeper analysis of the effects the upcoming merge for Ethereum will have on its price was discussed by analysts from the independent global macro and crypto research house MacroHive, who noted that the merge “will have bullish implications for Ether.”
According to MacroHive, “the prospect of being able to make a passive return on staked Ether will attract more investors into the space,” while the transition to proof-of-stake “will reduce Ethereum’s energy consumption by 99.95%.”
This, in turn, wilhelp to attract more institutional money into the Ethereum ecosystem as the Environmental, Social and Governance (ESG) concerns “around the energy consumption of mining/proof-of-work are mitigated.”
The merge will also have a notable impact on the circulating supply of Ether as the net issuance will undergo a significant drop-off once completed as block rewards are replaced with Ether staking yields.
“This, coupled with the ongoing Ether burning should make Ether deflationary and this should be bullish overall.”
Related: Crypto rallies to $2T market cap as institutions signal readiness to enter
Merge could mirror Bitcoin halvenings
A final bit of insight into the effects of the upcoming merge was put forth by options trader and pseudonymous Twitter user McKenna, who posted the following tweet likening the effects of the merge to that of Bitcoin halvenings.
The merge is a crowded trade but so is the BTC halvening.
Only difference is ETH becomes a deflationary asset W/ EIP1559.
S-curve adoption as the foundational web3 protocol is going to send ETH to monumentous heights over the next decade.
You aren’t ready Anon.
— McKenna (¤, ¤) (@Crypto_McKenna) March 23, 2022
The overall cryptocurrency market cap now stands at $1.997 trillion and Ether’s dominance rate is 18.7%.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Crypto tax policy framework passes India’s parliament despite pushback from lawmakers
Under the framework, those conducting crypto transactions will be subject to a 30% tax starting on April 1, while the 1% TDS requirement will take effect on July 1.
A tax framework on cryptocurrencies introduced by India’s Finance Minister Nirmala Sitharaman will become law in the country after being passed as an amendment to the Finance Bill.
On Friday, India’s lower house of parliament, the Lok Sabha, passed the 2022 Finance Bill, which included 39 amendments proposed by Sitharaman. The amendment on crypto established a 30% tax targeting digital asset and nonfungible token transactions and did not allow for deductions from trading losses while calculating income. In addition, taxpayers in India will have an additional 1% tax deducted at source, or TDS.
As per the new amendment proposed in the Finance bill 2022 to sections of crypto tax.
Loss cant be set off against any profit. Similar to betting tax rules. #reducecryptotax
— Aditya Singh (@CryptooAdy) March 25, 2022
Under the framework, those conducting crypto transactions will be subject to a 30% tax starting on April 1, while the 1% tax deducted at source requirement will take effect on July 1. The proposed framework received pushback from many Indian lawmakers in parliament as well as local industry leaders who claimed that the legislation would likely “kill crypto” in the country.
“What does a 1% TDS do to the business of the blockchain?” asked Member of Parliament Ritesh Pandey. “It is critical to understand that what the finance minister has done by introducing this 1% TDS on the blockchain industry — it is going to hamper the way this business is done.”
Pinaki Misra, another member of the Lok Sabha, added:
“Today to ban cryptocurrency is the equivalent of banning the internet. It is an idea whose time has come […] the government has gone on to a 30% [tax] on the basis that it must be at a higher [capital gains tax] because it is some kind of sin.”
Finance bill 2022 passed.
(For now) settled #crypto Law :
30% tax on crypto, #NFT gains
No inter crypto set off, carry forward
No expense deductions, mining expense claim
(No clarity yet on foreign holding / DeFi / ICO launched in India, banking support)
— Varun | Blockchain Lawyer (@Blockchainlaw91) March 25, 2022
With the addition of the tax policy on crypto, India has one of its first regulatory frameworks on digital assets following a 2020 decision from the country’s Supreme Court, which lifted a ban from the Reserve Bank of India on banks’ dealing with crypto firms. Appealing to the highest court would likely be one of the few legal paths available for opponents of the newly passed framework to seek a reversal.
“We firmly believe that there is a need to regulate and tax crypto but in its current form, it is poised to do more harm than good,” said WazirX founder and CEO Nischal Shetty. “It can result in cascading participation on Indian exchanges that adhere to the KYC norms and lead to a rise in capital outflow to foreign exchanges or to the ones that aren’t KYC compliant. This is not conducive for the government or the crypto ecosystem of India.”
Related: India’s crypto tax provides little legal clarity for traders and exchanges
A bill that proposed banning “private cryptocurrencies” in India had previously been mentioned in the parliamentary business. However, the government body is not scheduled to hear a discussion on the legislation during its current session, which ends April 8.