BTC, ETH Momentum Stalls; Yellen Clarifies Crypto Regulation: Enveloping Markets

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BTC and ETH Momentum Hits hawkish Remarks by Fed Chairman Jerome Powell, Janet Yellen Clarifies Definition of ‘Broker’ Regarding Digital Asset Regulation

U.S. Treasury Secretary Janet Yellen clarified that the definition of a “broker” does not include hardware wallet makers, software developers, miners, or unhosted wallet providers that do not support funds.

Grayscale sent the United States Securities and Exchange Commission (SEC) a letter arguing that the rejection of a BTC spot ETF violates the Administrative Procedure Act (APA).

US Federal Reserve Chairman Jerome Powell agrees to remove the word “transient” with regard to inflation, citing supply chain bottlenecks as a key factor.

BTC and ETH saw their momentum slow after Powell’s remarks, as sentiment of risk aversion settled on expectations of a tightening of monetary policy to fight inflation.

The volumes of NFT have decreased significantly in the last 24 hours, namely Bored Ape Yacht Club.

Latest in macro: S&P 500: 4,567, -1.90% NASDAQ: 15,537, -1.55% Gold: $ 1,773, -, 66% Crude oil WTI: $ 66.70, -4.65% Treasury at 10 years: 1.439%, -0.09% Crypto: BTC: $ 57,721, -0.91% ETH: $ 4,670, + 5.32% ETH / BTC: 0.0808, + 5.12% BTC .D: 41.72%, -1.51% Yellen provides regulatory clarity

The $ 1,000 billion bipartisan infrastructure bill that contained vague wording around cryptocurrency was enacted on November 15, 2021. Although the provisions will not come into effect until January 2024, many Digital asset industry experts fear this has devastating repercussions. for the emerging asset class.

The main cause for concern at this point has been the requirement for every broker to report their cryptocurrency earnings in a 1099-type form. Brokers should disclose the names and addresses of their clients.

The ambiguity around the definition of “broker” is important because it could be interpreted to include manufacturers of hardware wallets, software developers, miners or providers of non-hosted wallets. The reason for such a problem is that the aforementioned parties do not have all the information required to submit 1099s, which would theoretically put them in breach of the law.

Today Yellen provided much needed clarification. She said the guidance of the Financial Action Task Force (FATF) is in line with the ongoing guidance of the Financial Crimes Enforcement Network (FinCEN) on digital assets.

This means that the definition of “broker” does not include hardware wallet makers, software developers, miners, or unhosted wallet providers that do not support funds. Yellen went further by saying that the guidelines are not binding on the courts and are in fact only guidelines, according to a document outlining the questions from Sen. Pat Toomey (R-PA):

Source: letter from @jerrybrito Grayscale to the SEC

Craig Salm, a member of Grayscale’s legal team, took to Twitter to announce that the company had sent the SEC a letter arguing that the rejection of a cash BTC ETF violated the APA. Grayscale has made an official announcement on its website.

Last night, our lawyers for Davis Polk sent a letter to the SEC claiming that approval of ETFs based on #Bitcoin futures, but not ETFs based on the #Bitcoin spot, like the $ GBTC, is arbitrary and capricious, and therefore in violation of the Administrative Procedure Act (APA).

– Craig Salm (@CraigSalm) November 30, 2021 BTC and ETH drop on Powell’s remarks

Powell appeared alongside Yellen before the Senate Committee on Banking, Housing and Urban Affairs regarding the CARES Coronavirus Aid, Relief and Economic Security Act on Tuesday for the first of two days of testimony, Blockworks reported earlier today.

The Federal Reserve has a different definition of the term “transient inflation” than most Americans, Powell said, suggesting that the word be removed. With the highest CPI impression rates over the past 30 years, it’s safe to say inflation is no longer transient due to continued supply chain bottlenecks.

We hadn’t anticipated the supply side issues, and these are really [non-]linear and difficult to predict, Powell said. That’s really what we missed, and that’s why professional forecasters had much lower expectations for inflation.

Vice President Kamala Harris said on Twitter that President Joe Biden has taken steps to keep America’s largest ports operating 24/7 to reduce port congestion, which is helping supply chain issues and therefore higher inflation. (See image below.)

Source: Flexport

If inflationary pressures persist, Powell said, it may be appropriate to step up the pace of the decline in asset purchases, which the Fed announced will begin this month.

Powell’s remarks depressed both traditional financial markets and the digital asset market amid fears of tightening monetary policy. Prior to the testimony, ETH was a short distance from all-time highs while BTC broke above $ 59,000 for a brief moment before they both corrected.

The Fed and the market

“The interest rate market quickly devalued part of the normalization path expected by the Fed. This chart shows the Fed Funds curve on Friday (dark blue) and a week ahead (light blue). In my opinion, Friday’s action was not enough to slow the Fed’s cut or the expected rate hike. Wrote Jurrien Timmer, director of global macro at Fidelity.

Source: @TimmerFidelity

Powell’s remarks today reaffirmed Jurrien’s expectations that the Fed is considering sticking to the plan in terms of cutting and raising rates in order to fight high inflation.

“This means that to get back to the kind of great job market we had before the pandemic, we’re going to need a long expansion. To achieve this we are going to need price stability and the risk of persistently high inflation is also a major risk in returning to such a labor market, ”Powell added during the testimony.

The Fed’s recognition of inflation and the dangers it poses to the economy makes it more likely that the Fed will favor a tightening of monetary policy in the short to medium term, hence the feeling of aversion to the economy. risk in the markets after his remarks.

“The Fed chairman said the central bank would start discussing a cut faster than expected at its December meeting, as inflationary pressures are higher than expected. Yellen also mentioned the uncertainty over the government’s funding situation after Dec. 15, as well as Moderna’s CEO saying he expected the vaccines to be less effective against the new Omicron variant, ”Kevin said. Kang, Founding Director of BKCoin Capital, at Blockworks.

He went on to add: “With the uncertain macroeconomic outlook, I don’t think I see well the new all-time high for ETH in November. The dollar has risen significantly this month, also putting pressure on the rise in Bitcoin. However, we can certainly hope for the gathering of Santa Claus in December. “

Non-fungible tokens (NFT)

The trading volume for many NFT projects has dropped significantly over the past day. Bored Ape Yacht Club has cooled down considerably after a hot week last week.

OpenSea and Solanalysis business data for some of the major Solana and Ethereum projects can be found below:

Best Ethereum projects Best Solana projects

If you’ve made it this far, thank you for reading! I can’t wait to catch up tomorrow.

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Sam martin

Blockworks

Journalist

Sam Martin is a Columbus-based journalist covering the convergence of traditional financial markets and digital assets. He previously worked in the agricultural industry on a hedge office. He graduated from the University of South Carolina with a double major in International Business and Supply Chain Management as well as a minor in Japanese.

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