The combination of rising interest rates and a tight regulatory environment in the United States has led to an outflow of $417 million from the cryptocurrency sector in the last eight weeks, and the trading disruption of many altcoins has drained liquidity and prolonged the current crypto winter.
This environment is forcing cryptocurrency companies to rethink and adapt their business strategies.
Cryptocurrency exchange Binance, for example, is making progress in its efforts to diversify its sources of income amid legal challenges with regulators.. The company is launching a new subscription-based cloud mining product dedicated to Bitcoin (BTC), which allows users without equipment to purchase Bitcoin hash rates through the Binance cloud mining service.
The venture capital firm Andreessen Horowitz (a16z) is also taking a new direction, opening its first office outside the United States in London (United Kingdom). Chris Dixon, managing partner at a16z, cited a “predictable business environment” as one of the main factors in the decision. UK Prime Minister Rishi Sunak credited the expansion to having “proper regulation and controls” in place to “encourage innovation” while protecting consumers.
According to the Sovereign Wealth Funds Institute, a16z is the world’s largest private equity firm, with $35.8 billion in assets under management. With this move, the company joins many other crypto companies setting up operations in friendlier regulatory environments outside of the United States.
This week’s Crypto Biz looks at exits from cryptocurrency markets, a16z’s first branch outside the US, the current silent altcoin ban, and AI models set to be deployed for the first time in the UK.
Crypto Funds Outflows Hit $417 Million in Eight Weeks as Investor Caution Persists
The latest CoinShares weekly report revealed that cryptocurrency investment products saw outflows of $88 million last week. With this significant reduction, the streak of departures has reached eight weeks, with a total of USD 417 million. CoinShares analysts attribute this trend to monetary policy considerations, leading investors to remain cautious about digital assets. In the past week, Ether products witnessed outflows of $36 million, marking the largest weekly outflows for the asset since the Ethereum Merge in September 2022. For their part, Bitcoin investment products they recorded departures for a total of USD 52 million.
A16z Opens London Cryptocurrency Office, Claiming ‘Predictable’ Environment
Venture capital firm a16z will open its first office outside the US this year, adding to the landscape of US-based companies seeking greener pastures outside the country.. The decision followed a “productive dialogue” with the British Prime Minister and “months of constructive discussions” with Her Majesty’s Treasury, policy makers and the Financial Conduct Authority. In addition to the new office, a16z has announced its plan to launch a new Crypto Startup School (CSS) program in London in spring 2024. The most recent CSS program received over 8,000 applicants, with 26 companies receiving investment from a16z. .
EToro stops purchases of ALGO, MANA, MATIC and DASH for US clients
The eToro trading platform has halted purchases of Algorand (SOMETHING), Decentraland (MANNA), Polygon (MATIC) and Dash (DASH) for US customers in response to tokens being labeled as securities in recent US Securities and Exchange Commission lawsuits. The move came just days after its competitor Robinhood also suspended support for MATIC, along with Cardano (ADA) and Solana (SUN), two other cryptocurrencies considered securities by the regulator. Although the assets have been officially delisted, US eToro users can continue to hold and sell these tokens. The company said it remains “supportive” of the cryptocurrency industry and suggested the move was purely to prevent any potential regulatory breaches.
eToro has a framework in place which reviews the cryptoassets we offer in light of the rapidly evolving regulatory landscape. Due to recent developments, we will be making some changes to our crypto offering for US customers. (1/5)
— eToro US (@eToroUS) June 12, 2023
eToro has a framework that reviews the crypto assets we offer in light of the rapidly evolving regulatory landscape. Due to recent developments, we will be making some changes to our cryptocurrency offering for US customers (1/5)
UK will get “early or priority access” to Google’s AI models and OpenAI
The British Prime Minister, Rishi Sunak, recently announced that Google DeepMind, OpenAI and Anthropic – three technology companies considered world leaders in generative artificial intelligence (AI) technologies – have agreed to provide the UK with early access to their AI models.. Sunak made the announcement during a keynote address at London Tech Week, in which he unveiled a three-part plan for the deployment of AI systems. The prime minister did not clarify whether the UK would get earlier access to production models than the general public or contractors, or whether the commitment was simply to give access to government and other priority researchers.
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