Coinz.com

WASHINGTON (Reuters) – A U.S. bank regulator ordered crypto exchange FTX on Friday to halt “false and misleading” claims it had made about whether funds at the company are insured by the government.

The Federal Deposit Insurance Corporation said a July tweet by Brett Harrison, head of FTX’s U.S. operations, contained misleading claims that FTX funds and stocks purchased through FTX were FDIC insured, and ordered the company to remove any misleading language from its social media accounts and websites.

(Reporting by Pete Schroeder; Editing by Chris Reese)

By Elizabeth Howcroft and Samuel Indyk

LONDON (Reuters) – Tether, one of the world’s largest stablecoins by market value, said on Friday it had reserves worth $66.4 billion at the end of June, down from $82.4 billion at the end of March.

The reserves statement on Tether’s website comes a day after it said it had switched to accountancy firm BDO Italia to certify its reserves and that it would aim to release monthly reports by the end of the year.

Stablecoins are a type of cryptocurrency designed to keep constant value, such as a 1:1 U.S. dollar peg. They are widely used in cryptocurrency trading to move funds between different cryptocurrencies or into regular cash.

Financial regulators worldwide have warned that stablecoins could pose a risk to wider financial stability, with Britain among major economies looking to regulate the sector.

Tether says its coin maintains its value by holding dollar-denominated reserves to match or exceed the value of Tether coins in circulation.

Tether’s $66.4 billion reserve assets exceed its $66.2 billion liabilities, BDO Italia said in the statement.

Holdings of U.S. Treasury bills fell to $28.9 billion in the second quarter, the statement said, a $10.3 billion drop from the $39.2 billion it held in the first quarter.

Commercial paper and certificates of deposit were down to $8.4 billion, showing an $11.7 billion drop.

In July, Tether said that it had slashed its commercial paper holdings as part of a plan to reduce exposure to riskier assets.

Tether CTO Paolo Ardoino also said that the company will have cut its commercial paper holdings to $200 million by the end of August, and to zero by the end of October.

(Reporting by Elizabeth Howcroft; Editing by Edmund Blair and Alexander Smith)

By Joice Alves

LONDON (Reuters) – The U.S. dollar index surged on Friday and was on track for its biggest weekly gain since April 2020 on safe-haven demand, as investors worried about a further economic slowdown after Federal Reserve officials reiterated the need for higher rates.

The dollar index rose 0.5% to 108.01, its highest since July 15. The gauge is on track for a 2.2% rally this week, which would be its best weekly performance in more than two years.

Sterling tumbled 1% to $1.1839 on the day and was set for its biggest weekly decline against the dollar since September 2020, as worries around Britain’s economic slowdown intensified.

The euro, down 0.4% to $1.0053, was on course to decline 2% since last Friday, which would be its worst week since July 8.

“The U.S. dollar is again on the front foot this morning supported by another round of hawkish Fed speak … the overall tone of Fed officials suggests that the Fed still has a lot of work to do to contain inflation,” said Jane Foley, head of FX strategy at Rabobank in London.

St. Louis Fed President James Bullard, San Francisco Fed colleague Mary Daly and Kansas City Fed President Esther George all said continuing to hike rates in a bid to fight inflation would be reasonable.

Weakening Chinese data this week and an energy crisis in Europe are raising fears of further economic slowdown, which have also hit European currencies and supported safe-haven flows, Foley added. “We expect another break below parity,” she said. [FRX/]

British consumer sentiment in August fell to its lowest since at least 1974, a survey showed, as households feel “a sense of exasperation” about soaring costs as inflation hit double digits.

INFLATION WORRIES

Official data also showed Britain borrowed more than expected in July, underscoring the challenge facing the country’s next prime minister over how to provide more support to consumers.

Money markets now expect the Bank of England to raise interest rates to almost 4% by March. [IRPR]

European Central Bank board member Isabel Schnabel fueled inflation worries by saying consumer prices could still accelerate in the short term.

Yet despite the Fed chorus on the need for higher rates, the odds of another supersized 75 basis point hike next month have receded to 45% in money markets.

Fed Chair Jerome Powell will update the market on his views at the annual Jackson Hole symposium on Aug. 25-27.

Against Asian currencies, the greenback was up 0.8% to 137.02 yen, after touching its highest since July 27. China’s yuan slipped to its lowest since September 2020 at 6.8168 per dollar in onshore trading after the central bank set a much-weakened midpoint guidance, with traders expecting further downside due to an economic slowdown.

In cryptocurrencies, bitcoin fell 8.7% to $21,437. Ether was down 7.75% to $1,700.

“Weakness has seeped into the crypto sphere as speculators retreated from highly risky assets amid expectation that higher interest rates were set to linger for much longer,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

(Reporting by Joice Alves; Additional reporting by Bansari Mayur Kamdar; Editing by Shri Navaratnam and David Holmes)

SINGAPORE (Reuters) – Cryptocurrencies fell sharply on Friday, with sudden selling dragging bitcoin to a three-week low.

The reason for the drop was not immediately clear. Bitcoin fell as much as 7.7% to $21,404 over a few minutes during the European morning. It recovered slightly and last stood at $22,047. Ether was last down 5% at $1,753.

(Reporting by Tom Westbrook; Editing by Toby Chopra)

By Elizabeth Howcroft

LONDON (Reuters) – Tether, the world’s largest stablecoin, said on Thursday it had appointed accounting firm BDO Italia to vouch for its asset reserves, and would look to increase the frequency of publishing its reserves reports to monthly from quarterly.

Stablecoins are a type of cryptocurrency designed to keep constant value, such as a 1:1 U.S. dollar peg. They are widely used to move funds between different cryptocurrencies or into regular cash.

Tether says its coin maintains its value by holding dollar-denominated reserves to match or exceed the value of Tether coins in circulation. These reserves have long been the subject of scrutiny which sharpened after crypto markets’ sell-off in May following stablecoin TerraUSD’s collapse.

Tether, run by a British Virgin Islands company, has in recent years published reports in which accountancy firms attest to the size of its reserves. The reserves totalled $82.4 billion as of March 31, of which $39 billion was in U.S. Treasuries.

The most recent two reports were by a Cayman Islands firm, MHA Cayman. Before that, Tether used another Cayman Islands firm, Moore Cayman, its website shows.

BDO Italia is an audit and assurance company based in Italy, an independent member firm of BDO International Limited. Tether management includes at least two executives from Italy.

Tether said in a statement that it started working with BDO Italia in July, adding the relationship is “the next step in the company’s path towards a complete audit”.

“The utility of Tether has grown beyond being just a tool for quickly moving in and out of trading positions, and therefore it is mission-critical for us to scale alongside the peer-to-peer and payments markets,” chief technology officer, Paolo Ardoino said in the statement.

(Reporting by Elizabeth Howcroft, editing by Sinead Cruise and Emelia Sithole-Matarise)

By Huw Jones

LONDON (Reuters) – The European Central Bank (ECB) said on Wednesday it would harmonise how banks offer cryptoassets to ensure they have enough capital and expertise in a sector some European Union lawmakers have described as the Wild West.

Several crypto companies like Binance and Crypto.com have been authorised in EU countries such as Italy, France, Spain, Greece or Germany after complying with national safeguards to combat money laundering and terrorist financing.

This comes ahead of pan-EU licensing rules from 2023 at the earliest.

The ECB said banks were also considering whether to get involved in the crypto sector, but that national rules diverged quite extensively.

“In Germany, certain crypto activities are subject to a banking licence requirement and to date, several banks have requested to be authorised to conduct these licensed activities,” the ECB said in a statement.

“It is in this context that the ECB is taking steps to harmonise the assessment of licensing requests.”

The ECB, which directly regulates top euro zone lenders such as Deutsche Bank, UniCredit and BNP Paribas, said it would examine if crypto activities were in line with a bank’s risk “profile”, which determines how much capital to hold.

The ECB will also check if a bank can identify and assess risks from cryptoassets and if board members and IT staff have “robust experience” in the sector.

“Importantly, working closely with national supervisors, the ECB will strive towards greater consistency in prudential assessments across national regimes,” the ECB added.

Global regulators at the Basel Committee in Switzerland are assessing whether there should be specific capital buffers for holdings of crypto assets at banks.

The EU is also reviewing its bank capital requirements law.

Ville Niinisto, a Green Party member of the European Parliament, has proposed an amendment that bank holdings of bitcoin and other cryptocurrencies not backed by assets should not exceed 1% of a bank’s core tier 1 measure of capital.

Such a cap would need the backing of the full parliament and EU states to become law, a lengthy process.

Niinisto has also proposed regulators should assess if bespoke capital requirements are needed for blockchain, which underpins cryptoassets.

(Reporting by Huw Jones; Editing by Mark Potter)

LONDON (Reuters) – Singapore-based cryptocurrency platform Crypto.com has registered with Britain’s financial services regulator, the company said in a statement on Wednesday.

Crypto.com joined the Financial Conduct Authority’s (FCA) register, which means it has approval to offer crypto asset services and products to customers in the United Kingdom.

The UK is a “strategically important market for us”, said Crypto.com CEO Kris Marszalek, citing an increase in crypto adoption in the country and the government’s agenda to make Britain a hub for crypto assets.

As authorities around the world are grappling with how to regulate the crypto sector, firms are racing to gain registration status with financial watchdogs.

The FCA has previously faced a backlash in the crypto sector after turning down registration applications from scores of crypto companies.

Crypto.com, which has 50 million customers globally, registered in South Korea last week and in Italy in July.

(Reporting by Elizabeth Howcroft, editing by Sinead Cruise)

By Pete Schroeder and Hannah Lang

WASHINGTON (Reuters) – The U.S. Federal Reserve on Tuesday issued additional guidance for banks considering activities involving cryptocurrencies, emphasizing that firms must notify the Fed beforehand and make sure whatever they do is legally permitted.

The Fed said in a statement that while cryptocurrencies could present “potential opportunities” to banks, firms needed to make sure they had systems in place beforehand to ensure the volatile assets did not threaten safety and soundness or consumer protections.

Banks should also notify the Fed before engaging in any crypto-related activities, and any banks that had already pursued crypto initiatives should also notify the Fed about their involvement in the digital asset space, the agency said.

The Fed also encouraged state member banks to alert their state regulator before getting involved in crypto activities.

The Fed said in the supervisory letter that banks supervised by the agency should take several steps before engaging in any crypto-related activities, including determining if existing laws dictated any particular filings and whether any activities under consideration were legally permissible.

Banks should also have adequate risk management systems and controls in place before getting involved in crypto to ensure that any endeavors were conducted in a safe and sound manner and were compliant with relevant consumer protection statutes, the Fed said.

The move comes just days after several Democratic senators led by Massachusetts Sen. Elizabeth Warren called on the U.S. Office of the Comptroller of the Currency (OCC) to rescind its previously issued guidance on crypto and replace it with “a comprehensive approach in coordination with other prudential regulators”.

Last year, U.S. banking regulators including the Fed and the OCC jointly said that they intended to clarify in 2022 what sort of activities banks could engage in involving crypto, including whether firms were able to hold digital assets on their balance sheet and facilitate crypto trades on behalf of customers.

(Reporting by Pete Schroeder and Hannah Lang in Washington; Editing by Chris Reese and Alex Richardson)

By Alun John

HONG KONG (Reuters) – The safe-haven U.S. dollar hit a three-week high on Tuesday after weak global economic data revived concerns of a global recession.

The dollar index <=USD>, which measures the greenback against six major peers, rose 0.4% to 106.94, its highest since July 27.

It has recovered all of the losses recorded last week when cooler-than-expected U.S. inflation data sent investors out of the dollar and back towards assets associated with higher risk.

Risk appetite on Tuesday was hurt by a dip in German investor sentiment, a day after China’s central bank on Monday unexpectedly cut a key interest rate to try to revive credit demand and support the COVID-hit economy after weak economic data releases for July. [nL4N2ZO0XF]

“The U.S. growth picture is still intact, but the overall global picture remains fragile, given concerns about China, and that has put a dampener on risk sentiment,” Sim Moh Siong, currency strategist at Bank of Singapore, said.

The euro <EUR=EBS> fell 0.35% to $1.0123, sterling <GBP=D3> shed 0.26% to $1.202, and the Australian dollar <AUD=D3> was down 0.25% at $0.7 having earlier retreated below that symbolic level.

Australia’s close trade ties with China mean its currency is sometimes treated by traders as a liquid proxy for China’s yuan.

The dollar also climbed versus the Japanese yen <JPY=EBS> up 0.8% to 13.47.

The Japanese currency, which is often affected by the difference between benchmark yields in the United States and Japan rallied sharply last week on the expectation that cooler inflation would mean a less aggressive pace of Fed tightening and so lower U.S. yields.

However in recent days, several Fed policymakers have spoken of the need for continued rate hikes.

“Fed officials have no choice but to sound tough in the face of a very, very tight labour market and far too high inflation,” Kit Juckes, the head of FX strategy at Societe Generale, wrote in a research note.

“It’s hard to build a compelling case to sell the dollar in that world.”

In crypto currencies, bitcoin <BTC=BTSP> was a fraction lower at $24,000. Ether <ETH=BTSP> was up slightly at $1,900.

(Reporting by Kevin Buckland and Alun John; Editing by Shri Navaratnam, Simon Cameron-Moore, Jan Harvey and Barbara Lewis)

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) – Losses arising from cryptocurrency hacks jumped nearly 60% in the first seven months of the year to $1.9 billion, propelled by a surge in funds stolen from decentralized finance (DeFi) protocols, according to a blog post from blockchain analysis firm Chainalysis released on Tuesday.

In the same period last year, stolen funds from hacking amounted to $1.2 billion.

DeFi applications, many of which run on the Ethereum blockchain, are financial platforms that enable crypto-denominated lending outside of traditional banks.

Chainalysis noted that the trend is not likely to reverse any time soon, given the $190 million hacking of cross-chain bridge Nomad and $5 million hacking of several Solana wallets already in the first week of August.

“DeFi protocols are uniquely vulnerable to hacking, as their open source code can be studied ad nauseum by cybercriminals looking for exploits and it’s possible that protocols’ incentives to reach the market and grow quickly lead to lapses in security best practices,” Chainalysis said in the blog.

Much of the funds stolen from DeFi protocols can be attributed to “bad actors” affiliated with North Korea, especially elite hacking units like Lazarus Group, the U.S. firm wrote.

Chainalysis estimates that so far this year, North Korea-affiliated groups have stolen approximately $1 billion of cryptocurrency from DeFi protocols.

With respect to crypto scams, the blockchain intelligence firm saw a sharp 65% decline through July, in line with the slump in digital asset prices. Total scam revenue in the year to July was $1.6 billion, down 65% from around $4.46 billion in the same period last year.

Scammers may impersonate legitimate businesses and offer fraudulent crypto coins or tokens.

“Scams are down primarily because of the crypto downturn, but also because of the many law enforcement wins taken against scammers and the product solutions that exchanges can use to fight scamming,” said Kim Grauer, Chainalysis’ director of research, in an email to Reuters.

Crypto market capitalization late Thursday was at $1.1 trillion, according to CoinGecko, down more than 50% from around $2.35 trillion at the beginning of the year. Bitcoin so far this year has slumped roughly 48% in price and hovered between $20,000 to $24,000 in the last few months.

Since January 2022, scam-related proceeds have fallen in line with the price of bitcoin, Chainalysis said. Not only did proceeds from scams fall, but the cumulative number of individual transfers to scams in 2022 was the lowest in the past four years.

“Those numbers suggest that fewer people than ever are falling for cryptocurrency scams,” Chainalysis said in the report.

“One reason for this could be that with asset prices falling, cryptocurrency scams — which typically present themselves as passive crypto investing opportunities with enormous promised returns — are less enticing to potential victims.”

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Bernadette Baum)

By Medha Singh and Lisa Pauline Mattackal

(Reuters) – It looks like ethereum’s mega-upgrade is happening. Finally.

After years of delays, the “Merge” seems all but certain to take place in September, with the cryptography underlying the blockchain undergoing a radical shift to a system where the creation of new ether tokens becomes far less energy-intensive.

“It’s an exciting time for the ethereum ecosystem,” said Omar Syed, co-founder of smart contract platform Shardeum. “I think there will be drama surrounding the Merge, but I don’t think there will be any technical hiccups.”

Investors seem to agree, with ether outstripping big brother bitcoin.

Ether has seen six consecutive weeks of gains, pushing it up from a 1-1/2-year low of $880 in mid-June to levels closing in on $2,000, even though it’s way off its November 2021 peak of $4,868.79.

Bitcoin has paled in comparison, rebounding 37% from its June low to $24,116.

Ether is gnawing away at behemoth bitcoin’s market share: it now accounts for nearly a fifth – 19.7% – of the total crypto market capitalization of $1.14 trillion, up from less than 14.9% two months ago, according to CoinMarketCap. Bitcoin’s share has dropped to 40.2% from 44.9% in the same period.

“Crypto is still very tightly coupled, I think when the Merge successfully completes it could drive up the price of bitcoin as well,” said Alex Miller, CEO of Hiro, which builds developer tools to create applications for bitcoin.

If ethereum’s creators succeed, as is largely expected, it could be a game-changer for the blockchain, making it cheaper to mine and easy to adopt for fintech and other crypto apps.

Of course little is assured about the elusive transition, which has been delayed several times, with developers most recently axing plans to push the button in June, unnerving investors who began to fear it might never see the light of day.

The Merge is also is fraught with risk, and the fortunes of the roughly 122 million ether in circulation, worth about $232 billion, could be at stake should it fail.

If the upgrade doesn’t go well, it would “set the entire crypto world back five or 10 years,” Hiro’s Miller said.

Graphic: Ether recovers – https://graphics.reuters.com/FINTECH-CRYPTO/WEEKLY/klvykwqwnvg/chart.png

‘DIFFICULTY BOMB’

The ethereum blockchain currently uses the energy-intensive proof-of work (PoW) method of validating blocks, wherein miners use massive amounts of power to quickly solve complex computational problems to win newly minted coins.

On a parallel chain, ethereum has been testing a proof-of-stake (PoS) system that only requires miners to “stake” their coins to validate transactions and create new blocks. It promises 99.95% reduction in the blockhain’s energy consumption and prepares it for faster transactions.

Not everyone’s happy about the imminent merger of the two systems – notably ether miners, whose expensive mining rigs will be rendered obsolete, and can’t be used for mining bitcoin either.

Ether mining has hitherto been more profitable than bitcoin mining. Ether miners made $18 billion in 2021 versus $17 billion for bitcoin miners, according to Arcane Research.

Some miners have decided to shift to mining the next best option, such as the tokens ethereum classic or ravencoin.

At least one miner has declared plans to resist and continue mining ethereum, raising the spectre of some people keeping the PoW chain running in its current form even after the merge, likely competing with the upgraded blockchain.

However, that option has perils.

Ethereum creators have designed a “difficulty bomb” to exponentially increase mining difficulty in order to discourage the PoW parallel chain after the Merge.

Moreover, both Tether and USDC – the largest stablecoins – have thrown their weight behind the Merge, reducing the likelihood of a wider adoption of the parallel PoW chain.

FROTHY FUTURES

“The likelihood of a long-lasting chain split of Ethereum following the Merge remains slim,” said Alex Thorn, head of firmwide research at Galaxy Digital.

Nonetheless, at least some investors are preparing for a hard fork, or a parallel PoW chain, positioning in the derivatives market indicates.

Ether futures were also trading at premium at $1,905 on the CME exchange, “reflecting expectations around a proof of work fork,” said Matthew Sigel, head of digital assets research at fund manager VanEck.

“But that gap is not so huge so as to think there is extreme froth,” he added.

(Reporting by Medha Singh and Lisa Pauline Mattackal in Bengaluru; Editing by Vidya Ranganathan and Pravin Char)

By Joice Alves

LONDON (Reuters) – The safe-haven U.S. dollar rose on Monday after a new batch of disappointing Chinese data bolstered global recession worries, while the yuan weakened following a surprise key rate cut by the People’s Bank of China.

Chinese industrial output, retail sales and fixed-asset investment all fell short of analyst estimates in data published on Monday, as a nascent recovery from draconian COVID-19 lockdowns faltered.

“Of course, bad data from China also weighs on recession worries for the rest of the world,” said Ipek Ozkardeskaya, market strategist at Swissquote. That pushed down the euro against the greenback, she added.

The U.S. dollar index against six peers rose 0.6% to 106.3, consolidating near the middle of its range this month. The euro eased 0.6% against the dollar to $1.0191, after touching a one-week low.

The dollar was also supported by Federal Reserve policymakers’ hawkish comments in response to early signs that U.S. inflation may have peaked.

Richmond Fed President Thomas Barkin told CNBC on Friday that he would like to see inflation running at the Fed’s 2% target for “some time” before stopping rate hikes.

“The euro is slowly finding its way back down towards parity after the spike last week. It is too early for the Fed to take its foot off the brake, despite the drop in inflation,” said Jens Nærvig Pedersen, chief analyst, FX and rates strategy at DanskeBank. He maintained a bullish U.S. dollar view.

The onshore yuan eased to a two-week low of 6.7719 per dollar, compared with the previous close of 6.7430, after the People’s Bank of China unexpectedly lowered borrowing costs on medium-term policy loans and a short-term liquidity tool for the second time this year.

“Despite the warning of inflation risk and flush liquidity conditions, the dominant downside risks from the COVID spread and property-sector rout prompted the PBOC to cut rates to stimulate demand,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank.

The Australian and New Zealand dollars dropped by more than 1% after the data from China, a key trading partner.

Analysts will scour minutes of the Fed’s most recent meeting, due to be released on Wednesday, for more clues on policymakers’ thinking, while U.S. retail sales data on Friday will give some fresh insight on the economy’s health.

Money markets now price 47.5% odds of another 75 basis-point rate hike by the Federal Open Market Committee in September, versus a 52.5% probability of a slowing in the pace of tightening.

Last week, U.S. data fuelled investor hopes for less aggressive Fed tightening as it showed the first decline in import prices for seven months, following on the heels of statistics showing U.S. consumer and producer prices also cooling.

The euro has also been weighed down by Europe’s struggles with the war in Ukraine, the hunt for non-Russian energy sources and a hit to the German economy from scant rainfall.

Another European currency, the British pound also fell 0.55% against the dollar to $1.2068. [GBP/]

(Reporting by Joice Alves, additional reporting byt Kevin Buckland. Editing by Jacqueline Wong and Susan Fenton)

AMSTERDAM (Reuters) – Dutch authorities on Friday said they had arrested a 29-year-old man believed to be a developer for the crypto mixing service Tornado Cash, which the United States put on its sanctions list this week.

The U.S. sanctions announced on Monday followed allegations that Tornado Cash was helping conceal billions in capital flows, including for North Korean hackers.

By mixing cryptocurrencies, the online service makes it possible to conceal the origin or destination of digital payments, increasing their anonymity.

Tornado Cash is one of the largest crypto blenders identified as problematic by the U.S. Treasury.

The Dutch public prosecutor’s office for serious fraud, environmental crime and asset confiscation (FIOD) said Tornado was suspected of having laundered more than $7 billion worth of virtual currency since it was created in 2019.

Tornado Cash did not reply to a request for comment.

The FIOD said the man, who was not identified, was arrested in Amsterdam on Wednesday. He is believed to have helped facilitate criminal transactions, including “funds stolen through hacks by a group believed to be associated with North Korea.” He faces money laundering charges.

In June the Financial Advanced Cyber Team division of the FIOD started an criminal investigation into Tornado Cash, the statement said. It found Tornado Cash had been used to conceal large-scale criminal money flows, including from (online) thefts of cryptocurrencies.

Further arrests have not been ruled out, prosecutors said.

Monday’s move froze any U.S. assets of the crypto mixer and generally bars Americans from dealing with it.

(Reporting by Anthony Deutsch, Editing by Louise Heavens)

LONDON (Reuters) – British asset manager abrdn has bought a stake in digital assets exchange Archax, amid a wider push by investors into crypto-assets despite a recent plunge in value.

The stake, acquired for an undisclosed sum, gives abrdn a seat on the board at Archax and makes the asset manager its largest external shareholder, an abrdn spokesperson said.

Founded in 2018, Archax provides access to blockchain-based digital assets and became the first digital securities exchange to win regulatory approval from the Financial Conduct Authority, abrdn said in a statement.

“Blockchain technologies are inevitably going to form a big part of the future of financial markets,” abrdn Chief Executive Stephen Bird said.

The deal was first reported by the Financial Times.

Abrdn’s move reflects a wider surge in interest in digital assets from institutional investors.

The world’s biggest asset manager Blackrock launched a spot bitcoin private trust for institutional clients earlier this month, and has partnered with cryptocurrency exchange Coinbase to provide some of its services to clients.

Abrdn reported lower-than-expected profits earlier this week as turbulent markets dented its performance, and warned it would take longer to grow its revenues.

(Reporting by Iain Withers; editing by David Evans)

By Rae Wee and Vidya Ranganathan

SINGAPORE (Reuters) – The Japanese yen fell the most against a resurgent U.S. dollar on Friday, as a two-day rally in equities conceded to market expectations that the Fed will have to do a lot more to contain inflation.

That realisation followed speeches and statements from a bunch of Federal Reserve officials warning investors against being sanguine after this week’s slight softening in inflation numbers.

The latest was San Francisco Fed President Mary Daly, who said on Thursday that a 50 basis point interest rate hike in September “makes sense” given recent economic data including on inflation, but that she is open to a bigger rate hike if data warrants.

The Nasdaq and S&P 500 retreated on Thursday, despite fresh evidence of cooling inflation.

The dollar index rose 0.1% to 105.210, with the euro down to $1.0311.

The Japanese yen weakened 0.12% to 133.19 per dollar, while sterling was last trading at $1.2184, down 0.23% on the day.

The euro rose 0.05% against the yen at 137.340.

Even the kiwi, supported by expectations of a big rate rise in New Zealand next week, fell 0.16% versus the greenback to $0.643.

“The market will come to a realization that the FOMC has a lot more work to do and they will have to increase the funds rate to as high as 4% at the end of this year,” said Carol Kong, a Sydney-based senior associate for currency strategy and international economics at Commonwealth Bank of Australia.

“I do think there is some room for markets to revise higher again their expectation for the Fed funds rate, so that will help the U.S. dollar to push higher again and erase all the losses following the CPI and PPI figures that we got.”

Thursday’s data showed U.S. producer prices (PPI) unexpectedly fell in July amid a drop in the cost of energy products. That followed Wednesday’s surprise news that consumer prices (CPI) were unchanged in July due to a drop in gasoline prices.

While that data caused a relief rally in markets fearing the Fed’s super-charged tightening path, it was short-lived. Despite its recent bounce off mid-June lows, the tech-heavy Nasdaq is down about 18% so far this year.

The dollar index is still up 10% this year, rising alongside the 225 basis points of Fed rate rises since March.

Against the yen, it had fallen as far as 131.74 overnight, a one-week low, from Wednesday’s 135.30 peak. It was back at 133.245 on Friday.

US Treasury yields rose too, more at the longer end [US/], causing the inverted yield curve to be less so.

“It suggests scepticism from the bond market and taking a ‘one swallow doesn’t make a spring’ attitude,” analysts at Commerzbank wrote. “Inflation may have peaked but they may remain sticky and still too high for the Fed’s liking.”

In the world of cryptocurrencies, bitcoin was flat and last at $23,915.00.

(Editing by Sam Holmes)

By Elizabeth Howcroft

LONDON (Reuters) – Cryptocurrency derivatives trading on centralised exchanges rose to $3.12 trillion in July, a 13% monthly increase, researcher CryptoCompare said on Thursday, as crypto prices show signs of recovery from the recent market crash.

The derivatives market now makes up 69% of total crypto volumes, up from 66% in June, and helped push overall crypto volumes on exchanges to $4.51 trillion in July, CryptoCompare said.

Derivatives exchanges traded as much as $245 billion on July 29, 9.7% more than June’s top daily high of $223 billion.

But spot cryptocurrency trading edged lower to $1.39 trillion in July, a 1.3% monthly decline and the lowest since December 2020, CryptoCompare said.

The crypto market plunged in May and June as worries about high inflation and Federal Reserve interest rate hikes prompted investors to ditch risky assets. Following the collapse of a major pair of tokens, some cryptocurrency lenders froze customer withdrawals, and several crypto firms have cut jobs.

Prices have partly recovered, with bitcoin gaining 17% in July. At around $24,300, it is still a far cry from its all-time high of $69,000 in November.

“The rise in derivatives trading volume indicates an increase in speculative activity as traders believe there is room for further upside in this rally,” CryptoCompare said, noting that there is no U.S. Federal Reserve meeting in August.

Traders are also speculating on the upcoming Ethereum merge, CryptoCompare said, referring to an upgrade of the Ethereum network which is expected in September.

Ether has risen to around $1,900 from its June low of $880.

BinanceUSD – a stablecoin issued by crypto exchange Binance – became more prominent in July, CryptoCompare said, with spot volumes for bitcoin-to-BinanceUSD trades overtaking bitcoin-to-dollar for the first time.

Binance held on to the top spot among exchanges, with 54% of the market share, while Atom Asset Exchange (AAX) became the second largest, with volume rising 26.5% in July.

On Tuesday U.S. exchange Coinbase reported a larger-than-expected quarterly loss, with trading volumes having more than halved in the second quarter of 2022.

GRAPHIC: Bitcoin so far in 2022 (https://fingfx.thomsonreuters.com/gfx/mkt/gkplgolrovb/Bitcoin.png)

(Reporting by Elizabeth Howcroft; Editing by Richard Chang)

(This Aug. 9 stoy corrects spelling of name in paragraph 4)

By Tom Wilson and Medha Singh

(Reuters) – Another day, another hack – and another blockchain bridge burned.

When thieves stole an estimated $190 million from U.S. crypto firm Nomad last week, it was the seventh hack of 2022 to target an increasingly important cog in the crypto machine: Blockchain “bridges” – strings of code that help move crypto coins between different applications.

So far this year, hackers have stolen crypto worth some $1.2 billion from bridges, data from London-based blockchain analysis firm Elliptic shows, already more than double last year’s total.

“This is a war where the cybersecurity firm or the project can’t be a winner,” said Ronghui Gu, a professor of computer science at Columbia University in New York and co-founder of cybersecurity firm CertiK.

“We have to protect so many projects. For them (hackers) when they look at one project and there’s no bugs, they can simply move on to the next one, until they find a one weak point.”

At present, most digital tokens run on their own unique blockchain, essentially a public digital ledger that records crypto transactions. That risks projects using these coins becoming siloed, reducing their prospects for wide use.

Blockchain bridges aim to tear down these walls. Backers say they will play a fundamental role in “Web3” – the much-hyped vision of a digital future where crypto’s enmeshed in online life and commerce.

Yet bridges can be the weakest link.

The Nomad hack was the eighth-biggest crypto theft on record. Other thefts from bridges this year include a $615 million heist at Ronin, used in a popular online game, and a $320 million theft at Wormhole, used in so-called decentralised finance applications.

“Blockchain bridges are the most fertile ground for new vulnerabilities,” said Steve Bassi, co-founder and CEO of malware detector PolySwarm.

GRAPHIC: Crypto hacks (https://graphics.reuters.com/FINTECH-CRYPTO/WEEKLY/gdpzyoqlqvw/chart.png)

ACHILLES HEEL

Nomad and others companies that make blockchain bridge software have attracted backing.

Just five days before it was hacked, San Francisco-based Nomad said it had raised $22.4 million from investors including major exchange Coinbase Global. Nomad CEO and co-founder Pranay Mohan called its security model the “gold standard.”

Nomad did not respond to requests for comment.

It has said it is working with law enforcement agencies and a blockchain analysis firm to track the stolen funds. Late last week, it announced a bounty of up to 10% for the return of funds hacked from the bridge. It said on Saturday it had recovered over $32 million of the hacked funds so far.

“The most important thing in crypto is community, and our number one goal is restoring bridged user funds,” Mohan said. “We will treat any party who returns 90% or more of exploited funds as a white hats. We will not prosecute white hats,” he said, referring to so-called ethical hackers.

Several cyber security and blockchain experts told Reuters that the complexity of bridges meant they could represent an Achilles’ heel for projects and applications that used them.

“A reason why hackers have targeted these cross-chain bridges of late is because of the immense technical sophistication involved in creating these kinds of services,” said Ganesh Swami, CEO of blockchain data firm Covalent in Vancouver, which had some crypto stored on Nomad’s bridge when it was hacked.

For instance, some bridges create versions of crypto coins that make them compatible with different blockchains, holding the original coins in reserve. Others rely on smart contracts, complex covenants that execute deals automatically.

The code involved in all of these can contain bugs or other flaws, potentially leaving the door ajar for hackers.

BUG BOUNTIES

So how best to address the problem?

Some experts say audits of smart contracts could help to guard against cyber thefts, as well as “bug bounty” programmes that incentivise open-sourced reviews of smart contract code.

Others call for less concentration of control of the bridges by individual companies, something they say could bolster resiliency and transparency of code.

“Cross-chain bridges are an attractive target for hackers because they often leverage a centralized infrastructure, most of which lock up assets,” said Victor Young, founder and chief architect at U.S. blockchain firm Analog.

(Reporting by Tom Wilson in London and Medha Singh in Bengaluru; Editing by Pravin Char)

(Reuters) – BlackRock Inc, the world’s biggest asset manager, has launched a spot bitcoin private trust for institutional clients in the United States, according to a blog post on its website.

The trust will track the performance of bitcoin, offering direct exposure to the price of the digital currency, BlackRock said.

“Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets,” the company said.

The move comes a week after cryptocurrency exchange Coinbase Global Inc said it had partnered with BlackRock to provide its institutional clients with access to crypto trading and custody services.

The latest developments underscore how traditional institutions including pension funds, hedge funds and banks have been pushing into crypto assets lately, wagering the alternative asset class is here to stay.

Even as, the crypto sector has been battered by a slump in asset prices as investors fled risky assets amid geopolitical turmoil, inflation and worries of an impending recession.

(Reporting by Noor Zainab Hussain in Bengaluru)