Binance Thriving in China Despite Crypto Ban

Korean Crypto Exchange Presents Bitcoin Forecasts for Three ScenariosRecently, concerns over a potential US default have heightened due to the ongoing disagreement between Republicans and Democrats in the US Congress regarding the necessity of increasing the debt ceiling. Democrats, along with the Biden administration, advocate for authorizing additional debt, while Republicans propose spending cuts.Considering the historical patterns observed in the US and the inherently political nature of this matter, it is improbable that the uncertainty surrounding the debt ceiling raise will endure for an extended period. In the past, when faced with a similar situation in 2011, the debt ceiling was ultimately approved despite significant political divisions. Particularly with upcoming elections next year and escalating concerns of an economic downturn, it is likely that a resolution to the debt ceiling issue will be reached soon.In light of these circumstances, the economic research institute at one of South Korea’s major crypto exchanges Bithumb released a report that outlines three distinct scenarios depicting the potential unfolding of the debt ceiling issue in the US. Additionally, it has offered insights into the potential implications for Bitcoin under each scenario.Photo by Shubham’s Web3 on UnsplashBipartisan agreement to increase the debt ceilingIn the scenario where the debt ceiling is promptly raised as a result of a significant bipartisan agreement, the US is anticipated to adopt an expansionary fiscal policy by issuing government bonds to prevent a default. If a debt ceiling deal is reached, it is projected that short-term bond issuance will reach a net amount of $1.4 trillion by the end of the year. There is also a growing consensus that medium- and long-term bond issuance may commence in the third quarter. Additionally, the possibility of interest rate cuts as early as the second half of this year entered the equation. In the long term, this could potentially lead to a depreciation of the dollar as market liquidity increases, thereby weakening the currency. It is worth noting that historically, the value of Bitcoin tended to go up when market liquidity rises.Debt ceiling disagreement and delayed negotiationsAnother scenario entails the failure of the two parties to reach an agreement and a subsequent delay in approving a raise to the debt ceiling. Should the debt ceiling not be raised in a timely manner, the US would potentially encounter an unparalleled default on its debt obligations. This default could trigger a severe credit crunch, resulting from international credit downgrades and a weakened global standing for the US. Such circumstances would further escalate the risk of an economic crisis.As the negotiations on the debt limit continue to be delayed, there will be a prolonged period of uncertainty in both Treasury issuance and secondary markets. This uncertainty poses risks to money market funds (MMFs) that hold a significant portion of short-term Treasuries, potentially resulting in losses. Consequently, there could be a shift towards reverse repo (RRP) transactions as investors seek alternative avenues. In fact, Treasury liquidity has recently exhibited signs of deterioration, with MMFs and RRPs garnering considerable attention in the market.Heightened concerns regarding short-term Treasuries could lead to a higher volume of reverse repo trades compared to repo trades. Repo transactions use Treasuries as collateral, whereas reverse repo transactions involve depositing funds with the Fed or lending money to the Fed in exchange for collateral, which often includes Treasuries, thereby earning interest. In such a scenario, market liquidity could become trapped in the Fed, potentially rekindling risks within the banking system.Given their sensitivity to liquidity conditions, crypto markets are anticipated to experience a temporary decline. However, Bitcoin has exhibited a historical pattern of appreciating in value as an alternative to the US banking system, especially during instances of small and medium-sized bank failures. In the event of prolonged negotiations and an escalating risk of a US default, the demand for safe-haven assets like Bitcoin might surge. As a result, Bitcoin could gain favorability as investors seek refuge in alternative assets amidst uncertain market conditions.Linking debt ceiling increase to spending reductionThe last scenario involves a conditional agreement accompanied by measures aimed at reducing the deficit, as proposed by Republicans. Given the longstanding concerns surrounding excessive US deficits, any agreement to raise the debt ceiling would likely be contingent upon fiscal consolidation and spending cuts. Notably, as of March 31, 2023, the US federal deficit is approximately 8% of GDP, a figure comparable to the 8.3% average observed in 2011 when the possibility of a US default reached its peak.While fiscal consolidation is necessary to ensure fiscal sustainability, unless the US significantly increases tax revenues, an increase in the debt ceiling may be negotiated at the expense of significant cuts to the national budget. In such a case, the US economy would inevitably experience the adverse effects of reduced government spending.The Republican party has put forth a demand of $4.8 trillion in deficit reduction over the next ten years as a condition for raising the debt ceiling. This figure translates to an average of $480 billion per year or approximately 1.8% of the current year’s GDP (as of May). However, it is important to note that in the medium to long term, reductions in government spending without complementary expansionary monetary policies have the potential to accelerate GDP decline. If Congress agrees to cuts in government spending, it could increase the probability of the Fed swiftly reversing its tightening policy. Unless the Fed halts its tightening measures, the likelihood of a US recession may become more pronounced.If the Fed decides to cut interest rates earlier than anticipated in response to the Treasury’s fiscal consolidation efforts, Bitcoin, which is known to be more responsive to long-term monetary policy, might be able to overcome the short-term downturn and experience an upward trend.The authors contend that at present, market attention is primarily directed towards the matter of raising the debt ceiling, taking into account the potential risks of a US default and the possibility of a bond rating downgrade. However, they believe it is unlikely that US politicians will make radical decisions in the run-up to next year’s presidential election.While the issue of raising the debt ceiling will have a short-term impact, the report argues that the main drivers of Bitcoin’s price in the medium to long term will be the Fed’s monetary policy and the occurrence of Bitcoin’s halving event.It is important to note that there is a time lag between the end of the Fed’s tightening measures and the halving of Bitcoin. In the short term, the price trajectory of Bitcoin will likely be influenced by factors such as the potential failure of additional small and medium-sized US banks (which is concerning given recent outflows of US bank deposits) and increased demand for safe-haven assets due to the delay in raising the debt ceiling. These factors will play a greater role in shaping Bitcoin’s short-term performance.

Assemble Protocol’s Native Token Now Supported by Ceffu’s Custody SolutionAssemble Protocol, a blockchain-based global point integration platform headquartered in Hong Kong, has announced a partnership with Ceffu, previously known as Binance Custody, according to South Korean blockchain news outlet Bonmedia.Ceffu serves as the sole institutional custody partner of Binance Exchange, the world’s largest cryptocurrency exchange based on trading volume. It started as a custodian platform in 2021 and underwent a rebranding from Binance Custody to Ceffu in February. Ceffu offers support for a diverse range of digital assets, including BTC, ETH, BNB, LTC, and XRP.Photo by rc.xyz NFT gallery on Unsplash$1M minimum depositThrough this collaboration, ASM, the native token of Assemble Protocol, has been included in the list of Ceffu’s supported assets, enabling ASM holders to securely store their tokens in the custodian’s cold storage. The custody service imposes a minimum deposit requirement of $1 million worth of digital assets.Reward points to ASM tokenAssemble Protocol offers users the ability to unify their reward points obtained from various debit and credit cards into ASM. By integrating these scattered rewards, users can conveniently manage and utilize their points through a unified digital currency. The platform also rewards participants within its ecosystem with tokens based on their contributions. The more participants contribute, the greater their rewards. Moreover, advertisers can pay fees to Assemble Protocol to promote their products within the ecosystem.Park Kyu-do, CEO of Assemble Protocol, expressed his appreciation for Ceffu’s support of ASM, emphasizing the security and transparency it offers for storing assets. Park also mentioned that the collaboration with the Binance ecosystem will lead to further expansion of the protocol.Meanwhile, Assemble Protocol plans to launch mobile and desktop versions of Assemble 2.0 later this year.

Mirae Asset Securities, South Korea’s largest asset management firm, has begun suspending trading for bitcoin ETFs, according to industry sources on Friday. This comes after an announcement made by the Financial Services Commission (FSC) stating that brokering spot bitcoin ETFs may be considered a violation of the government’s stance on virtual assets and the Financial Investment Services and Capital Markets Act.Photo by Dmytro Demidko on UnsplashTaking preemptive measuresThe asset manager has blocked new purchases of spot bitcoin ETFs listed in Canada and Germany starting yesterday and is considering suspending trading of bitcoin futures ETFs that have been listed in overseas markets since 2021. This includes the Proshares Bitcoin Strategy ETF, Valkyrie Bitcoin Strategy ETF, Invesco Galaxy Bitcoin Strategy ETF and VanEck Bitcoin Strategy ETF. As Korean financial authorities are putting the brakes on domestic investments in the recently approved spot bitcoin ETF by the U.S. Securities Exchange Commission (SEC), it is believed that Mirae Asset Securities is putting a preemptive halt to trading in other bitcoin ETFs. Spot vs futuresSpot bitcoin ETFs differ from futures ETFs in that they track the price of Bitcoin by actually holding the cryptocurrency, while the latter tracks its price through futures contracts. South Korean securities firms have been brokering futures ETFs listed in overseas market for a while now.