Bitcoin is collapsing. News outside of Europe is mixed.

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Bitcoin traded lower on Friday, ending the week around $ 39,000. Its 2% collapse in the past 24 hours may reflect some profit taking after a recent 35% increase.

The news from Europe was both positive and troubling for the cryptocurrency.

And Congress may be getting closer to regulating the crypto industry.

A bill introduced in the House this week would create legal definitions of digital assets, establish new reporting requirements, allow securities regulators to monitor the market, and clarify that cryptocurrencies and stablecoins do not. are not legal tender.

The bill would also allow the Federal Reserve to issue a digital version of the dollar, a big step for a central bank digital currency that has been a priority for some lawmakers and policymakers. China started issuing a digital version of its currency last year, and other central banks are on the way.

Digital assets and blockchain technology hold great promise, and it’s clear that assets like Bitcoin and Ether are here to stay, Rep. Don Beyer (D-Virginia), the sponsor of the bills, said in a statement. Unfortunately, the current digital asset market structure and regulatory framework are ambiguous and dangerous for investors and consumers.

Market reaction to this can be mixed. While strict regulation can be a deterrent, it could also help legitimize crypto as a traditional asset class. This, in turn, could create a broader investor base among large pools of institutional assets managed by pension funds, endowments and other large investors.

It seems to be going on now in Germany. The country will allow institutional funds to hold up to 20% of their assets in Bitcoin and other crypto products, according to a Bloomberg report.

The funds, including the insurance and pension portfolios, manage € 1.8 trillion, or roughly $ 2.1 trillion in assets. While they are generally managed conservatively, they may be keen to put a slug in Bitcoin or other cryptocurrencies. Even at 5% of their assets, that would represent over $ 100 billion in crypto purchases.

At the same time, the world’s largest crypto exchange, Binance, is facing new regulatory pressures and is withdrawing its futures products from some European markets.

Binance announced on Friday that it would end offers of futures and derivatives in Germany, Italy and the Netherlands. Traders from these countries will not be able to open new term or derivative accounts, and they will have 90 days to close their open positions, Binance said.

According to a Wall Street Journal report, U.S. investors also trade crypto derivatives on foreign exchanges based overseas, thereby avoiding U.S. regulatory requirements.

Binance leads all exchanges in open interest futures volume, according to Fundstrat, a crypto research firm. This is another step the company has taken to work with local authorities following a global backlash against the company for its general ambivalence over financial regulation, Fundstrat said in a statement. note.

Binance faces other issues in Europe and Asia. Italian regulators recently warned the stock exchange against providing unauthorized investment services. The stock exchange is also the subject of a class action lawsuit in Italy relating to futures trading.

In an email to Barrons, the company said Binance.com does not operate outside of Italy. This has no direct impact on the services provided on Binance.com.

Malaysia is also cracking down: Authorities ordered Binance to shut down its website and mobile app on Friday, accusing the company of illegally operating a digital asset exchange. Malaysia has berated Binance in the past, but now appears to be shutting the door on exchange activity.

Binance.com does not operate in Malaysia, the company said, adding that we take our compliance obligations very seriously. We actively keep abreast of evolving policies, rules and laws in this new space.

Meanwhile, investor interest in crypto only seems to be picking up. According to a new report from crypto.com, the number of global crypto users reached 221 million in June, doubling in the past four months. While Bitcoin drove much of the market growth in January and February, the adoption of altcoin in May led to a massive increase in crypto users, according to the report.

This might be great for the demand for crypto, but it’s one more reason for the regulatory group to keep rolling.

Write to Daren Fonda at [email protected]

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