Active Bitcoin addresses plunge as regulators eye crypto
CryptoCompare data shows the price of Bitcoin (BTC) is still moving between the $30,000 and $40,000 range, although this week its volatility dropped significantly, with a seven-day high around $36,000 after hitting a $33,000 low.
Ethereum’s Ether, the second-largest cryptocurrency by market capitalisation, managed to break through resistance at $2,000 and moved steadily up to $2,300 throughout the week ahead of expected upgrades to the network.
Cryptocurrency prices this week fell as on-chain activity on some leading cryptocurrencies begins to weaken. Available data shows that the number of active addresses on the Bitcoin network crashed by around 60% in the past six weeks, from an average of 1.3 million per day to 500,000.
Notably, the drop has seen Ethereum overtake Bitcoin by the number of active addresses, as Ethereum now has roughly 200,000 more active addresses than Bitcoin. This is the third time this year ETH overtakes the apex cryptocurrency, having done so on June 5 and June 6 as well. The previous time ETH was in the lead was in early 2017.
The drop in on-chain activity came even as investments in the cryptocurrency space kept on growing. In India, cryptocurrency investments reportedly grew from around $200 million to nearly $40 billion in the past year, despite outright hostility toward the nascent asset class from the country’s central bank and a proposed trading ban.
Data from blockchain analytics firm Chainalysis has shown that more than 15 million people in India are now trading cryptocurrencies. The figure is compared to the 23 million crypto traders in the US, and the 2.3 million in the UK.
Over the week it was also revealed that through its Europe Opportunity Fund, Morgan Stanley purchased 28,289 shares of Grayscale Bitcoin Trust (GBTC). The move was revealed in an SEC filing and shows Morgan Stanley has been increasingly active in the cryptocurrency space in a bid to meet growing demand from clients.
Earlier this year, the Wall Street giant allowed some of its funds to indirectly invest in Bitcoin through cash-settled futures contracts and Grayscale’s Bitcoin Trust. Each of the allowed funds, including the Variable Insurance Fund, the Insight Fund, and the Institutional Fund, may invest up to 25% of its assets in Bitcoin. The Europe Opportunity Fund includes a mix of companies based in Europa in the technology and non-technology space among other investments.
Outside of the investment spectrum, Bitcoin suffered a blow after the pseudonymous co-owner of the Bitcoin.org website was ordered by London’s High Court to stop hosting its copy of the Bitcoin white paper over a copyright infringement brought forward by self-proclaimed Satoshi Nakamoto, Craig Wright.
The judge ruled a default judgment because ‘Cobra’ did not make an appearance. Wright’s representation, Ontier LLP, revealed the court also ordered Bitcoin.org to publish a copy of the court’s order while an inquiry will be established to determine the damages caused by Cobra against Wright.
Judge David Hodge QC issued an injunction prohibiting Cobra from infringing on Wright’s copyright in the UK. Bitcoin.org is an open-source website , Satoshi Nakamoto and Martti Malmi, and has been dealing with several legal threats over the last few months.
Wright has claimed to be Nakamoto himself and claims he wrote the Bitcoin white paper. Since at least the start of the year, Bitcoin.org said it believes Wright’s claims are “without merit” and refused to take it down.
Regulators target crypto
Over the week regulators have been eyeing cryptocurrency networks and businesses. Democratic Representative and co-chair of the House blockchain caucus, Bill Foster, has called for a regulatory framework to be put in place that would enable third parties to reverse fraudulent or criminal blockchain transactions, as well as identify digital-asset holders.
Foster argued that tools are necessary for the government, as well as American businesses to protect themselves from ransomware attacks. In Foster’s eyes, the new laws should require that, in certain scenarios, a third party could learn the real-world identity of a cryptocurrency user through a “very heavily guarded key”.
The UK’s Financial Conduct Authority (FCA) has ordered cryptocurrency exchange Binance to stop undertaking any regulated activity in the country as Binance Markets Limited and the Binance Group reportedly do not hold authorisation to conduct regulated activities in the UK. Similarly, the Cayman Islands‘ financial regulator has said Binance isn’t “registered, licensed, regulated or otherwise authorised by the Authority to operate a cryptocurrency exchange from or within the Cayman Islands”.
READ MORE: Binance’s FCA snub could be just the beginning of a clampdown on crypto exchanges
On top of all that, Mexico’s finance minister Arturo Herrera said cryptocurrencies aren’t legal tender assets and banks aren’t authorised to deal with them “in order to maintain a healthy distance between these and the financial system”.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies but has no bias in his writing.
Featured image via Unsplash.