Elizabeth Howcroft News

(Reuters) -Bitcoin is back in the headlines, having roared to a new record high, just as many of the world's major central banks are starting to pave the way towards cutting interest rates, but only if inflation behaves.

Cryptocurrencies staged a recovery this year after a torrid 2022 in which a market meltdown and a string of scandals, including the collapse of FTX and fraud charges against its CEO, Sam Bankman-Fried, undermined the credibility of the industry. The price of bitcoin, the biggest cryptocurrency and the market's chief barometer, has more than doubled this year, reaching a 20-month high in November of $42,000 per token. As of Friday, 2023 was its best year since 2020 in terms of percentage gains. The market has been buoyed by expectations that cooling inflation will allow central banks globally to forgo further rate hikes and start easing next year, making risk assets more attractive. A long-anticipated move by the U.S. Securities and Exchange Commission(SEC) to approve a spot bitcoin exchange-traded fund (ETF) has also been a boost.

Tether, said on Monday its assets rose 5.7% to $86.5 billion in the second quarter of 2023, while it made more than $1 billion «operational profit», a 30% increase on the previous quarter. Stablecoins are a type of cryptocurrency which aim to keep a constant value and are usually backed by traditional assets such as dollars. Tether says there is $83.8 billion of its coin in circulation, which makes it the third largest cryptocurrency overall, according to market tracker CoinGecko. Tether's reserves report, signed off by accountants BDO Italia, says Tether's assets rose to $86.5 billion in the three months to June 30, 2023, up 5.7% from the previous quarter and a record high, according to previous reports on its website. Tether is a key cog in global digital asset trading, with many crypto-to-crypto trades denominated in the stablecoin.

Stablecoin Tether's reserves were worth $81.8 billion at the end of the first quarter, according to a reserves attestation on Wednesday, up around $14.8 billion from the previous quarter.Crypto investors have flocked to the stablecoin in recent months, considering it to be a relatively safe haven during the turbulence of the U.S. regional banking crisis and a regulatory crackdown on crypto firms.Tether's reserves include $53 billion of U.S. treasuries, the report said, up from $39.2 billion at the end of 2022. They also include $1.5 billion worth of bitcoin and $5.3 billion worth of loans which the report said are «over-collateralized». In a post on its website, Tether said it has been seeking to «reduce its reliance on pure bank deposits» and leverage the repo market instead. A repo, short for repurchase agreement, refers to when financial institutions use U.S. Treasuries and other high-quality securities as collateral to raise cash, often overnight.

Non-fungible tokens (NFTs) are a kind of blockchain-based asset representing a digital file such as an image, video or item in an online game. They exploded in popularity in 2021, as crypto-rich speculators rushed to cash in on rising prices, but sales volumes have slumped in recent months. The third quarter of 2022 saw $3.4 billion in NFT sales, down from $8.4 billion the previous quarter and $12.5 billion at the market's peak in the first quarter of the year, DappRadar said. While the nascent NFT market benefited from cryptocurrency price gains and high risk appetite among investors in 2021, these conditions have turned sharply in 2022, as central bank rate rises prompt investors to ditch risky assets. Bitcoin is trading around $19,000, down from its November peak of $69,000.

Joining the Financial Conduct Authority's (FCA) register means that Crypto.com has approval to offer crypto asset services and products to customers in the United Kingdom in compliance with anti-money laundering and «terrorist» financing rules. The United Kingdom is a «strategically important market for us», said Crypto.com CEO Kris Marszalek, citing an increase in crypto adoption in the country and the government's agenda to make Britain a hub for crypto assets. As authorities around the world are grappling with how to regulate the crypto sector, firms are racing to register with financial watchdogs.

Crypto hedge fund Three Arrows Capital (3AC) has entered liquidation, a person familiar with the matter told Reuters on Wednesday, in the latest sign of the market downturn hurting the crypto industry. Singapore-based 3AC is one of the higher profile crypto investors to have run into difficulties following the sharp sell-off in the market for digital currencies seen in recent months. Crypto broker Voyager Digital issued 3AC with a default notice on Monday after it failed to make payments on a loan of 15,250 bitcoin (approximately $324 million) and $350 million worth of USDC, a stablecoin.