Research Summary

The article discusses several key developments in the crypto industry. Binance has delisted 12 privacy-enabling cryptocurrencies, including Zcash, in Spain, France, Poland, and Italy due to regulatory pressure in the EU. The Office of Financial Research (OFR) published a report analyzing data on digital-asset intermediaries, suggesting a high degree of market concentration risk. The European Systemic Risk Board (ESRB) published a report investigating crypto-assets and the decentralized finance (DeFi) sector, warning of potential risks within crypto markets. Lastly, former Coinbase product manager, Ishan Wahi, and his brother, Nikhli Wahi, have settled insider trading charges with the SEC.

Actionable Insights

  • Regulatory pressure is impacting privacy-focused cryptocurrencies: Binance’s decision to delist privacy-focused cryptocurrencies in certain European countries highlights the ongoing tension between privacy-focused technology and regulatory bodies. This could potentially lead to broad application and regulatory overreach, stifling innovation and limiting the potential of privacy-focused cryptocurrencies and the DeFi space.
  • Market concentration risk in digital-asset ecosystem: The OFR report suggests a high degree of market concentration risk in the digital-asset ecosystem. However, it’s important to note that the report’s findings are limited to centralized intermediaries and do not include DeFi.
  • DeFi and crypto-assets under scrutiny: The ESRB report warns of potential risks within crypto markets and suggests that new regulation might be required due to DeFi’s potential systemic risk. However, the report’s understanding of DeFi and crypto-assets has been criticized as problematic, leading to questionable assertions and recommendations.
  • Insider trading charges in the crypto industry: The settlement of insider trading charges by former Coinbase employees with the SEC could set a legal precedent for future cases involving insider trading and fraudulent activities in the crypto industry.

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