Crypto Market Developments: Coinbase, Ethereum, and Regulatory Updates

Coinbase Promotes USDC Over USDT

Coinbase, the leading American cryptocurrency exchange, is advocating for users to transition from Tether (USDT) to USD Coin (USDC), labeling USDC as a more reliable digital dollar. This move is part of what is being called the second great stablecoin war. Coinbase emphasizes USDC's backing by cash and short-dated U.S. treasuries and offers zero-fee trades to encourage the switch. The exchange highlights USDC's transparency through monthly attestations by Grant Thornton LLP and offers up to 1.5% APY for holding USDC.

Nomad Bridge Relaunch and Refund Efforts

After a $190 million hack, Nomad Bridge is set to relaunch, offering partial refunds to affected users. Users can undergo a KYC verification process and link their wallet addresses to their Coinlist accounts for compensation. The refunds are determined based on pro-rata shares of recovered funds, providing some relief, though not all users will be fully compensated.

Ethereum's Shanghai Upgrade Announced

Ethereum developers have set March 2023 for the Shanghai upgrade, which will allow users to unstake their ETH in the PoS chain. The upgrade prioritizes ETH withdrawals and includes updates like the EVM Object Format and proto-danksharding. If milestones aren't met by January, some features might be delayed to ensure withdrawals proceed without hindrance. This upgrade aims to enhance network security by encouraging more users to stake.

Crypto Derivative Market Stability

Following the FTX collapse, crypto prices have plummeted, but derivative data suggests neutral trading. Despite a drop in market capitalization below $850 billion, CoinGlass reports a balanced demand between leveraged longs and shorts. Glassnode data indicates no significant decline in derivative trading, with around $3 billion in Bitcoin derivatives positions closed recently. This neutrality shows investors are reassessing their strategies post-FTX.

U.S. Banking Regulator's Crypto Caution

The U.S. Office of the Comptroller of the Currency (OCC) advises caution when investing in cryptocurrencies due to emerging risks. The OCC highlights concerns over stablecoin stability, immature risk management, and the potential for contagion. It stresses the lack of consistent regulation in the crypto industry and warns of the volatility and increasing number of firms offering bank-like services. These comments echo global calls for stricter crypto regulations.