The cryptocurrency market has experienced another volatile week as major events have rocked the financial world. Bank failures and regulatory challenges have caused uncertainty, leaving investors wondering about the future of the industry.
In this weekly news roundup, we’ll dive into the biggest headlines from the world of cryptocurrency and explore what they could mean for the future of crypto.
Biden doubles down on tax hikes for high earners
President Joe Biden is set to announce a series of major tax hikes on billionaires, investors, and those making over $400,000 annually. The budget request calls for a 25% minimum tax on billionaires and would nearly double the capital gains tax rate from 20% to 39.6%.
This proposal could increase the top tax rate for Americans earning $400,000 from 37% to nearly 40%, according to Bloomberg. The aim of this move is to reduce the deficit, and it would affect the wealthiest individuals and big corporations.
Ethereum a security? New York Attorney General’s lawsuit could set a precedent for the crypto industry
The New York State Attorney General, Letitia James, has filed a lawsuit against KuCoin for allegedly violating securities laws by offering tokens that meet the definition of security without registering with the Attorney General’s office.
One of the tokens listed in the lawsuit is Ethereum, the second-largest cryptocurrency by market cap. If the New York Attorney General succeeds in redefining Ethereum as a security, it could have significant ramifications for the entire crypto industry.
The outcome of the New York Attorney General’s lawsuit against KuCoin could prompt federal regulatory action. The Chair of the Commodity Futures Trading Commission (CTFC) believes Ethereum (ETH) is a commodity, despite opinions to the contrary from SEC Chairman Gary Gensler.
Silicon Valley Bank collapse sparks fears of a new financial crisis
After catering to the tech industry for three decades, Silicon Valley Bank (SVB) collapsed on March 10, 2023. The Santa Clara-based lender suffered from an old-fashioned bank run, which forced state regulators to seize the bank and make the Federal Deposit Insurance Corporation (FDIC) its receiver.
SVB was the biggest bank to fail since September 2008, when Washington Mutual failed with $307 billion in assets. The collapse of SVB could have significant implications for the banking sector and the tech industry, and it could prompt more regulatory scrutiny.
Credit Suisse Stocks Plummet as Investor Confidence Wanes
Shortly following the collapse of SVB, Credit Suisse announced in its 2022 annual report that it has identified “material weaknesses” in internal controls over financial reporting and not yet stemmed customer outflows.
The reporting weaknesses come as Credit Suisse is trying to recover from a string of scandals that have undermined the confidence of investors and clients. Shares of Credit Suisse were down more than 20% on the news. This announcement has triggered panic in the Euro markets, and we can expect more volatility in the coming days.
Bitcoin Defies Market Turmoil, Holds Above Key Support at $25K
Despite the turmoil in the global markets, Bitcoin has maintained its value and seen a significant reversal after a mild correction, with a 10% increase over the past 7 days. Price is now trading above previous local highs formed in August 2022.
Crypto investors are anticipating this as a potential bull run, but the upcoming Federal Reserve policy update raises questions about the continuation of hikes or a cut in monetary policy. The recent failure of SVB and a looming debt ceiling crisis in the US may force the Federal Reserve to loosen its grip on the economy with a pause on rate hikes.