Good Morning!

Glad to have you back for another edition of the UseTheBitcoin.com newsletter.

📰 Today’s Highlights:

1. Treasury Secretary Yellen’s Warning on Crypto Risks: In a testimony before the House Financial Services Committee, U.S. Treasury Secretary Janet Yellen highlighted several potential risks posed by the crypto industry to the financial system, emphasizing concerns over stablecoins, potential runs on crypto platforms, and volatile prices.

2. Cathie Wood Observes Gold-to-Bitcoin Shift: Cathie Wood, CEO of ARK Invest, notes a trend shift from gold to Bitcoin following the launch of spot Bitcoin exchange-traded funds (ETFs). Wood highlights Bitcoin's rise relative to gold, indicating a substitution effect as investors find a less cumbersome way to access Bitcoin.

3. Terraform Labs Co-Founder Extradited: Han Chang-joon, the former financial officer of Terraform Labs, has been extradited to South Korea, marking a crucial development in the aftermath of the Terra stablecoin ecosystem's collapse, amounting to $60 billion in May 2022.

4. Hong Kong Crypto Regulatory Crackdown Intensifies: Hong Kong's Securities and Futures Commission (SFC) issues a stern warning to crypto exchanges, demanding license applications by February 29, failing which they must cease operations by May 31. The regulatory crackdown aims to ensure compliance and improve public awareness of crypto-related risks.
   
   All this and more in today’s headlines!

📰 News Highlights:

Treasury Secretary Yellen Sounds Alarm on Crypto Risks🚨💼 [Source][Source]

In a testimony before the House Financial Services Committee, U.S. Treasury Secretary Janet Yellen highlighted several potential risks posed by the crypto industry to the financial system. Yellen emphasized concerns over stablecoins, potential runs on crypto platforms, and volatile prices. 

The testimony reflects the latest work of the Financial Stability Oversight Council (FSOC), which Yellen leads. The council has been actively addressing crypto risks, considering them among the top categories of potential worry, and Yellen urged Congress to enforce regulations and pass legislation for stablecoins and the spot market for non-security crypto assets.

“The Council is focused on digital assets and related risks such as from runs on crypto-asset platforms and stablecoins, potential vulnerabilities from crypto-asset price volatility, and the proliferation of platforms acting outside of or out of compliance with applicable laws and regulations.” statement by Janet L. Yellen.

Yellen's remarks underscore the ongoing efforts by regulatory bodies to navigate the complexities of the crypto landscape and mitigate potential threats to financial stability. While not revealing new initiatives, her focus on digital assets maintains the crypto sector in the government's regulatory spotlight.

Cathie Wood Observes Gold-to-Bitcoin Shift🪙🔄 [Source][Source]

Cathie Wood, CEO of ARK Invest, notes a trend shift from gold to Bitcoin following the launch of spot Bitcoin exchange-traded funds (ETFs). Wood highlights Bitcoin's rise relative to gold, indicating a substitution effect as investors find a less cumbersome way to access Bitcoin. 

The CEO anticipates this trend continuing, especially during periods of banking sector weakness, citing Bitcoin's behavior as a "risk-off asset." Wood's observations align with Fidelity's analysis, showing an increased correlation between Bitcoin and gold in 2023, challenging their previously inverse relationship.

Wood acknowledges the recent spot Bitcoin ETF launch-induced price correction but emphasizes the resilience of long-term Bitcoin holders, with a significant portion of coins remaining untouched for 155 days.

Terraform Labs Co-Founder's Finance Officer Extradited🌍⚖️ [Source][Source]

In the ongoing Terra saga, Han Chang-joon, the former financial officer of Terraform Labs, has been extradited to South Korea, marking a crucial development in the aftermath of the Terra stablecoin ecosystem's collapse, amounting to $60 billion in May 2022. 

Han, along with Terraform Labs co-founder Do Kwon, was arrested in March 2023 while attempting to escape using forged documents. The extradition decision follows Han completing a four-month prison sentence in Montenegro for attempting to travel with fake documents.

The Montenegrin police revealed the extradition, stating that Han is now in the hands of South Korean authorities, who will initiate criminal proceedings against him for multiple offenses related to fraud in financial investment services. The charges carry severe consequences, including the possibility of life imprisonment in South Korea. The Terra saga began in 2018 when Kwon founded Terraform Labs, and the subsequent collapse in May 2022 triggered a series of industry implosions.

Hong Kong Crypto Regulatory Crackdown Intensifies🚫 [Source][Source]

Hong Kong's Securities and Futures Commission (SFC) issues a stern warning to crypto exchanges, demanding license applications by February 29, failing which they must cease operations by May 31. The regulatory crackdown aims to ensure compliance and improve public awareness of crypto-related risks. 

The SFC has emphasized the need for investors to move funds from platforms without license applications. Currently, 14 firms are seeking licenses, with only OSL and HashKey Exchange receiving approval to offer services to retail investors.

The regulatory deadline underscores Hong Kong's efforts to establish itself as a crypto hub while diligently addressing potential risks. The ongoing investigations into platforms like JPEX, coupled with the SFC's vigilant approach, indicate a growing focus on investor protection and regulatory alignment within the crypto space.

🔍 Industry Insights: 

Bitcoin Faces Pressure as Interest Rates Soar📉 [Source][Source][Source]

Bitcoin approaches $42,000 as U.S. interest rates surge, driven by Federal Reserve Chair Jerome Powell's hawkish stance on rate cuts. Cryptocurrencies experience a broad decline, with the 10-year U.S. Treasury bond yield rising, impacting risk assets. 

Despite the overall slump, Chainlink's LINK stands out with a modest 2% gain. Powell's confirmation of the Fed's reluctance to cut rates in March and robust economic data contribute to the pressure on crypto prices.

The crypto market's response to rising interest rates reflects ongoing correlations with traditional financial indicators. Bitcoin, holding above $42,000, faces challenges amidst the absence of fresh investment narratives. The complex interplay between macroeconomic factors and crypto dynamics continues to shape market sentiments, prompting stakeholders to assess long-term prospects amid short-term fluctuations.

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😂 Crypto Meme of the Day: 

And that’s it for this today.

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See you all in tomorrow’s edition!

Jonathan Gibson
UseTheBitcoin.com