The trend of Bitcoin supply has changed, and the trend of eastward movement has taken shape

Original article: "Web3 Financial Transaction Center Moves Eastward, Hong Kong's New Deal Leads to a New Round of Encryption Competition"

Author: BitpushNews Asher Zhang

The year-on-year regional supply changes of Bitcoin show that Bitcoin is beginning to move from the US to Asian wallets. What is happening in the encryption market behind this? Behind the US regulation and the Hong Kong New Deal, how the Web3 world will develop in the future, and what huge development opportunities will be ushered in in the future, this article will discuss these issues.

The trend of Bitcoin supply has changed, and the eastward movement is unstoppable

Since the United States tightened the regulation of the encryption market this year, encrypted tokens have also undergone some significant changes. Bitcoins previously located in the United States have been continuously transferred to wallets located in Asia. Glassnode recently released a set of Bitcoin year-on-year regional supply change graphs, from which you can observe the changes in the supply of BTC held during trading hours in the United States and Asia. In this graph, an almost equal but opposite supply change can be noticed, indicating that coins previously located in the US continue to move to wallets located in Asia. (U.S. YoY supply change: -7.5%; Asia YoY supply change: +6.9%).

Ark Invest analyst Yassine Elmandjra wrote in a note on Monday that the United States is at risk of losing its lead in the global crypto ecosystem, giving way to countries such as the United Arab Emirates, South Korea, Australia and Switzerland. The report noted that cryptocurrency liquidity in the U.S. has declined significantly, and that the U.S. cryptocurrency ecosystem, once dominated by established and reliable institutions, now faces a void that may put interest from other institutional investors on hold. For example, trading firms Jane Street and Jump Trading have reduced their participation in the US domestic market. Bitcoin trading volumes in the country have fallen by 75%, from $20 billion a day in March to around $4 billion last week, according to CoinMetrics data. In the U.S., regulatory uncertainty appears to be holding back both incumbents and new entrants in the crypto space.

The U.S. encryption supervision is becoming stricter, and the Hong Kong government’s new policy attracts market attention

Recently, the U.S. encryption regulation has become more and more stringent, while the Hong Kong government’s new encryption policy has attracted a lot of attention. Among them, encryption exchanges have the greatest impact, and Binance.US is the most representative of regulation. According to Bitui, the US CFTC sued Binance in late March, accusing it of violating trading and derivatives rules. Subsequently, Binance announced its decision to terminate the asset purchase agreement with Voyager Digital, citing the “hostile and uncertain regulatory environment in the United States.” Kaiko tweeted on May 17 that Binance.US’s market share on U.S. exchanges has halved in recent weeks, with ETH trading volumes falling particularly sharply. Both @LMAX and @Bitstamp have doubled their respective market shares since the start of the year.

According to a Bernstein research report, as part of a potential settlement, the U.S. Commodity Futures Trading Commission (CFTC) may require Binance to cease operations in the United States. According to the report, Binance US is a small part of Binance’s overall business, accounting for less than 5% of the exchange’s global business. This latest enforcement does not have “significant implications for the overall crypto market” as Binance did, the report said. The U.S. business is unimportant and the firm does not expect the news to trigger a massive market sell-off as the "regulatory narrative" shifts away from the U.S. to the expected flow of funds in Hong Kong and mainland China.

The regulatory tentacles of the United States are not limited to the mainland, but have further extended to overseas. In the United States, the IRS has warned that crypto crackdowns are coming when it comes to digital assets and tax avoidance measures, according to Bitwitter; it is expected that the IRS will update tax regulations under Sections 6045 and 6045A, two Both regulations cover brokers reporting digital asset information. In addition, the US Internal Revenue Service (IRS) will send commissioners to Singapore and other countries to conduct investigations related to encryption taxation and financial crimes; Oversight of taxation and financial crimes in currency services”.

On the whole, the United States continues to increase domestic supervision, prompting many crypto exchanges to choose to withdraw from the U.S. market, and the long-arm jurisdiction of the United States has made many institutions in the crypto market more willing to comply with regulations, which has also become a key issue in crypto finance. The main reason why the market is starting to move eastward is that this trend will accelerate in June from the current point of view.

The Hong Kong Encryption New Deal will be implemented on June 1st, and major exchanges are looking forward to it

According to a report by Bitui, in February this year, the Hong Kong Securities Regulatory Commission launched a consultation on the proposed regulations applicable to operators of virtual asset trading platforms. According to the latest news from the official website of the Hong Kong Securities Regulatory Commission, the consultation period on the proposed regulatory requirements applicable to operators of virtual asset trading platforms licensed by the Securities and Futures Commission will end on March 31, 2023. Proposed regulatory requirements for licensed virtual asset trading platforms. The revised proposed regulations will come into force on 1 June 2023. The SFC said it noted strong support from respondents for allowing licensed virtual asset trading platforms to provide services to retail investors. The Commission will implement the proposal to allow licensed virtual asset trading platforms to provide services to retail investors.

Behind this news, the most eye-catching thing is that "this association will implement the proposal on allowing licensed virtual asset trading platforms to provide services to retail investors". The encryption market was affected by this, and the bulls finally took the upper hand and came out of the short-term decline decline. Some big Vs even expressed optimism that the bull market is approaching. According to "BiTui" report, Binance founder Zhao Changpeng (CZ) even stated on social media that CCTV mentioned that Hong Kong accepts applications for virtual asset platforms, which aroused strong reactions from the Chinese encryption community. , "Historically, such reports have or will trigger a bull market."

In response to the new policy of the Hong Kong government, the major exchanges are also gearing up and looking forward to it. BitMEX stated that from May 29, 2023, Hong Kong users will not be able to access the BitMEX website or API. After that, all account balances will be transferred to the BitMEX Hong Kong account, and users will need to access these services through the new BitMEX Hong Kong mobile application. In addition, from May 29, 2023, the existing BitMEX trading platform will no longer accept any new Hong Kong users, and Hong Kong users will only be able to open accounts through the dedicated BitMEX Hong Kong mobile app. On May 26, according to Huobi official Twitter, Huobi will officially launch Huobi Hong Kong station Huobi HK, and is ready to provide users with a variety of cryptocurrency trading services. It is reported that starting from June 1, users can buy, sell and hold mainstream cryptocurrencies including BTC, ETH and other major cryptocurrencies listed in the independent index through Huobi HK. Others such as OKX and Binance have also made positive moves, and a new encryption competition is coming.

Outlook

In addition to the new regulations on June 1, the most important thing this year is the Hong Kong Monetary Authority’s public launch of the Digital Hong Kong Dollar Pilot Program. 16 financial leaders from the financial, payment and technology industries will conduct their first round of trials within this year to conduct in-depth research on " Potential use cases of the “Cyber Hong Kong Dollar” in six areas, which cover comprehensive payment, programmable payment, offline payment, tokenized deposit, third-generation Internet (Web3) transaction statistics and tokenized asset statistics. If the digital Hong Kong dollar advances smoothly, it is likely to revive Hong Kong’s status as an international financial center and attract a large number of Web3 talents, projects, and landing RWA; blockchain technology will thus achieve a wider range of use cases, and the encryption market may be realized by then. real prosperity.