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Bear markets are the best times to... regulate?

It has become a common adage in the Digital Asset Ecosystem that bear markets are the best times to build. When the price has fallen and panic has given way to capitulation, only those who understand the fundamentals of the technology and have a more long-term view of Digital Assets are the ones that typically remain. Unlike previous market cycles, this time, the group of long-term builders has been joined by regulators.

The certainty that Digital Assets are here to stay seems settled in their minds, and now the position of many, such as Fed Vice Chair Lael Brainard, is that strong regulation is needed. After the Lehman Brothers Déjà vu, we have seen in recent weeks, with account freezes, insolvencies and bankruptcies, some regulators are of the opinion that the Digital Asset Ecosystem is replicating risks and mistakes of traditional finance, without the regulatory protection that safeguards investors in the legacy system.

Hence, one of the most likely products resulting from this bear market is legislative frameworks for the sector with international scope and coordination. Also, on the roadmap for government agencies is the development of Central Bank Digital Currencies (CBDC). Depending on its implementation, this instrument enables a disintermediated relationship between Central Banks and the general public, which poses an existential risk to the service offered by commercial banks. The American Bankers Association (ABA) is aware of the threat, as reflected last week in a letter to the U.S. Department of Commerce.

Clear rules would likely open the floodgate for many investors to gain direct market exposure, especially institutional investors. But a CBDC seems to deepen the tutelary, watchdog and centralizing role that Central Banks have over the economy. This is probably the reason why more and more banks are approaching the Digital Asset Ecosystem, as a way to adapt their services for their survival.

Treasury Department proposes a framework for international regulation of Digital Assets

In response to the Executive Order issued by President Biden, the U.S. Treasury Department released a proposed international regulatory framework for Digital Assets that seeks to ensure that "America's democratic values are respected" while ensuring consumer, investor and business protection, as well as the stability of the financial system.

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Risks of recession will increase by 2023, according to IMF

The head of the International Monetary Fund, Kristalina Georgieva, stated that the global economic outlook has worsened since April, which is why the fund will reduce its growth forecast for 2022 to 3.6%. In addition, Georgieva expressed that recession expectations are still present for 2022, and even more for 2023.

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Fed Vice Chair calls for strong regulation of Digital Assets

Federal Reserve Vice Chair Lael Brainard stated that the agency is looking closely at the flaws demonstrated by the Digital Asset Ecosystem in recent months, arguing that strong regulations are necessary for a stable financial system that protects investors.

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American Bankers Association fears the consequences of issuing a CBDC

A direct relationship between the Federal Reserve and the retail public, without the need for intermediaries, is one of the biggest risks the banking industry fears when considering the issuance of a Central Bank Digital Currency (CBDC). This was reflected by the American Bankers Association in a recent letter to the U.S. Department of Commerce.

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UK asset managers lobby government to establish blockchain-focused funds

The UK Investment Association, an organization representing the country's asset management industry, is lobbying the government to establish a new class of funds employing blockchain technology, issuing digital tokens to investors instead of shares or fund units.

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Digital Assets do not pose a financial risk to the Bank of England

Despite the recent widespread fall in prices, which has resulted in trillions of dollars in losses and several firms filing for bankruptcy, to the Bank of England's Financial Policy Committee, Digital Assets still do not pose an immediate risk. However, it is important to keep them monitored due to the vulnerabilities they have shown to have. They therefore stress the need to improve regulatory frameworks to address the activities of this market.

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UK to introduce legislation for stablecoins in August

Bank of England Governor Jon Cunliffe said that the UK Treasury will introduce legislation to give a regulatory framework for stablecoins before the August vacations, despite the resignations of two Treasury officials.

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EUR-USD parity could affect euro-based stablecoins

The fall in the price of the euro relative to the U.S. dollar means that those investors who were sheltering in euro-based stablecoins have lost capital over the past few months in dollar terms. Should the psychological 1:1 level be lost, it would increase the current selling pressure for euro stablecoins, further deteriorating their market share in favor of the dollar's already hegemonic position in the digital asset market.

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150-year-old bank to have its own decentralized stablecoin lending vault

US-based Huntingdon Valley Bank will be able to borrow up to US$ 100M in the Dai stablecoin from its own vault on MakerDAO, an amount that would expand to US$ 1B over the next 12 months. The community behind MakerDAO approved with 87% of the votes the creation of the vault for the bank founded in 1871, which establishes a novel bridge between traditional finance and DeFi.

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Voyager files for bankruptcy

Digital Asset lending provider Voyager Digital filed for bankruptcy last Wednesday, July 6, after issuing a notice of default to hedge fund Three Arrows Capital (3AC), who defaulted on their obligations for a loan of around US$ 650M.

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U.S. officials holding Digital Assets can no longer work on related policies

The U.S. Office of Government Ethics issued a legal notice stating that federal government officials who own Digital Assets are disqualified from working on policies and regulations linked to the matter, as they could see their actions influenced by the possible effects they may have on the market.

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Solidus Capital is the leading firm in Digital Assets, which provides exclusive, agnostic, and institutional services such as Liquidity, Custody Solutions, Wealth (Private Accounts and Portfolio Management), Multi-Strategy Funds, Private Placements, and other sophisticated products in conjunction with bespoke accompaniment to High Net Worth Individuals, Family Offices, Companies, Wealth Managers and Banks.
 
By relying on Solidus' services, investors avoid the classic fatal mistakes:

- Lacking information in the context and moments of the market  

- Executing operations inefficiently  

- Using unreliable service providers and infrastructure  

- Closing of accounts and freezing of funds

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