Crypto exchange FTX announced Tuesday (June 21) that it’s buying Embed Financial Technologies, which will give it Embed’s white-label brokerage services and application programming interfaces (APIs).

The acquisition will also include the subsidiary Embed Clearing. This will see the company expanding its financial services for U.S. customers, letting it route, execute, clear and custody all customer equities and options accounts with Embed.

According to FTX U.S. president Brett Harrison, the goal is to “provide a comprehensive trading application that spans all asset classes.”

“For equities and options trading this necessarily includes services such as clearing and custody, and our partnership with Embed showed us that they have built excellent technology and infrastructure to provide these services,” Harrison continued. “We’re looking forward to working together to integrate both our teams and our technology as we continue to build FTX Stocks.”

Meanwhile, political donations from crypto brokers, venture capitalists and investors surged in recent months, Bloomberg reported Tuesday.

The donations hit $52 million through the end of May from the first 15 months of this midterm election cycle. The report said this saw a doubling of the amount put into donations from these companies.

Bloomberg noted that FTX co-CEO Ryan Salame donated $8 million in May to American Dream Federal Action, which has backed Republicans with $7.6 million. Additionally, his colleague, Sam Bankman-Fried, has donated $500,000 to the Senate Majority PAC, which supports Democrats.

In other news, Reuters reported Tuesday that Celsius’s decision to stop taking withdrawals has hurt some crypto investors.

“I was probably earning $100 a week,” said Jeremy Fong, a 29-year-old civil aerospace worker quoted by Reuters. “That covered my groceries.”

Celsius made its decision last week to freeze withdrawals for all 1.7 million customers, due to what it said were extreme market conditions and the mass issues with the crypto market for the past month or so. As such, Fong has seen around 30% of his long-term crypto holdings cut down, which he said was “very uncomfortable.”

Finally, Binance.US is looking to raise $50 million in additional funding to help continue the exchange’s seed round, CoinDesk wrote Tuesday.

Binance.US is the American arm of the crypto exchange Binance. The raise will target “strategic partners,” the report said, and wouldn’t be a new Series A round.

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The Bank for International Settlement has its “2022 Annual Economic Report” coming out next week and wanted to highlight its opinion of cryptocurrencies, releasing that chapter ahead of time on June 21.

Hyun Song Shin, the head of research and an economic adviser to the “central bank of central banks,” summed it up this way: “Our broad conclusion is captured in the motto, ‘Anything that crypto can do, [central bank digital currencies] can do better.’”

While central bankers should embrace the best of crypto’s innovations — notably tokenization and programmability — the BIS argued that both central bank digital currencies (CBDCs) and fast-payment systems are better foundations for these innovations than blockchain-based digital assets.

See also: BIS Says CBDCs Can Do Anything Crypto Can, but Better

Digging in, the BIS believes that CBDCs are structurally flawed — arguing that the cryptocurrency industry is too fragmented, not nearly as decentralized as it claims to be and hamstrung by its reliance on speculation. Beyond that, it said, crypto’s heavy reliance on dollar-pegged stablecoins to facilitate cross-blockchain trades and allow speculators to avoid volatility amounts is done by importing “the credibility of central bank money.”

It also has a core philosophical difference with crypto’s faith in decentralized systems that allow for “trustless” transactions that bypass the need to rely on a third party, like a bank with cryptography.

Which kind of makes sense for an organization owned by central banks.

Powell Gets Positive

Federal Reserve Chairman Jerome Powell said that a U.S. CBDC has the potential to “help maintain the dollar’s international standing” at a conference on June 17, marking his most positive — or perhaps least neutral — comment on a digital dollar to date, Reuters reported.

Read more: Fed Chair: CBDC Could Preserve Dollar’s Standing

One of the strongest arguments made in congressional debates over the need for a CBDC is that it would help maintain the position of the U.S. dollar as the world’s reserve currency and its primacy in international trade.

That said, a U.S. CBDC came under strong attack from the banking lobby last month, with the Bank Policy Institute warning that a digital dollar would “undermine the commercial banking system in the United States and severely constrict the availability of credit to the economy” — notably by disintermediating its members and gutting the deposits they rely upon to make loans.

Related: Heyday or Doomsday? Regulators, Banks at Odds Over CBDCs

The same benefits could be had from real-time payments systems and well-regulated — meaning bank-issued — stablecoins. Which is to say, about 180 degrees away from the BIS’ position.

EU Banks Aren’t Thrilled

Meanwhile, across the pond, the European Institute of International Finance (IIF) was not quite as forcefully opposed to a digital euro as U.S. banks are to a digital dollar.

See also: Bankers Urge EU to Proceed With Caution on Digital Euro

That said, it still called for a rethink of the European Commission’s position on a CBDC — which is technically undecided, but the European Central Bank (ECB) has been pushing aggressively for a digital euro as a way to fight the threat it believes stablecoins present.

An IIF official said that the U.S. is looking more at “if,” and the ECB is talking more about “how.”

Read more: EU Regulators Lash Out at Stablecoins While Boosting CBDCs

However, the CEO of investment banking giant UBS, Ralph Hamers, said that while it’s risky if not done right, a digital euro could be “fast and cheaper … [and] ensure that there is integrity and with that trust in the system that upholds the euro.”

Related: UBS CEO: Digital Euro Could Be ‘Fast and Cheaper’

The ECB’s point man on the digital euro, Fabio Panetta, told a conference on June 16 that the central bank has “been clear from the outset that we see financial intermediaries having a crucial role in distributing and promoting the digital euro,” adding that “by design, the digital euro will not crowd out existing private financial instruments. Rather, it will preserve the coexistence of central bank money and private money, supporting innovation by private intermediaries.”

Elsewhere, Panetta has proposed a $1.5 trillion digital euro cap with individuals limited to €3,000 to €4,000, in order to protect financial institutions from the disintermediation U.S. banks fear, Bitcoin.com reported.

CBDC Security Vital

Meanwhile, The Atlantic Council, a U.S. think tank, has warned that the cybersecurity of CBDCs “is one of the major challenges to overcome if a CBDC is to be issued in the United States.”

Its June 15 report, “Missing Key: The challenge of cybersecurity and central bank digital currency,” added that strong privacy protection could enhance security “because they reduce the risk and potential harmful consequences of cyberattacks associated with data exfiltration … and may generate and store less sensitive data in the first place,” it said. This would give hackers less incentive to hack the system — for personal data.

Additionally, the Hong Kong Monetary Authority and Bank of Israel are working with the BIS Innovation Hub in Hong Kong on a research project aimed at retail CBDC cybersecurity research, Ledger Insights said.

eNaira Won’t Require Smartphones

In an effort to expand financial inclusion, Nigeria is planning to make its eNaira CBDC useable on multiple phone types — not just on more expensive smartphones, but on feature phones via Unstructured Supplementary Service Data (USSD) codes which work much like SMS messages, Ledger Insights reported on June 13. It hopes to improve financial inclusion beyond its current 70%.

Meanwhile, it also said Japanese blockchain firm Soramitsu has been selected to study CBDCs by both the Philippines and Vietnam, in addition to Laos, with which it began working last year. Vietnam is targeting de-dollarization alongside concerns that the digital yuan, as well as AliPay and WeChat Pay, will bring the same issues.

Additionally, Coingeek reported that Bangladesh’s central bank announced plans to look at a CBDC as a way to push back against “risky” cryptocurrencies and stablecoins.

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The richest of crypto’s billionaires, Sam Bankman-Fried, is riding to crypto’s rescue, bailing out two teetering firms to the tune of nearly $750 million dollars.

In a one-two punch, the CEO of the FTX cryptocurrency exchange backstopped the troubled crypto lending platform BlockFi with a $250 million line of credit on Tuesday (June 21), just days after his Alameda Research trading firm offered up $500 million in cash and cryptocurrencies to Voyager Digital, a crypto broker.

See also: Bankman-Fried Bails Out Crypto Broker Voyager and Blames Fed for Downturn

Both were rumored to be facing difficulties after crypto lenders Celsius and Babel Financial halted withdrawals, and hedge fund Three Arrows Capital suffered forced liquidations and is reported to be facing insolvency. BlockFi was one of the firms that liquidated Three Arrows’ positions at a huge loss when it couldn’t meet margin calls.

BlockFi can confirm that we exercised our best business judgment recently with a large client that failed to meet its obligations on an overcollateralized margin loan. We fully accelerated the loan and fully liquidated or hedged all the associated collateral.

— Zac Prince (@BlockFiZac) June 16, 2022

Bankman-Fried is attempting to “stem contagion” after a stablecoin’s $45 billion collapse sent financial shockwaves throughout the industry just as the Fed’s inflation-fighting rate hikes sent all markets tumbling, he told NPR on Sunday (June 19).

“I do feel like we have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves,” Bankman-Fried noted. “Even if we weren’t the ones who caused it, or weren’t involved in it. I think that’s what’s healthy for the ecosystem, and I want to do what I can help it grow and thrive.”

He’s apparently serious about the “loss to us” part, as the Financial Times (FT) reported Tuesday (June 21) that “FTX’s claims on the facility would be subordinate to all client balances,” if BlockFi fails.

This isn’t the first time Bankman-Fried has stepped in. Last August, FTX loaned Japanese FinTech and cryptocurrency exchange Liquid Group $120 million after it was hit with a $100 million hack. In February, FTX acquired the company outright on undisclosed terms.

“Sam became a lender of last resort,” said Anatoly Crachilov, CEO of fund manager Nickel Digital Asset Management, the FT reported.

That isn’t to say he’s handing out loans to all comers — or not acting in his own interest. For one thing, FTX was one of the three exchanges that liquidated Three Arrows.

For another, Crachilov noted, “if you have a few Lehman events at the same time, concentrated, then it could impose crypto winter for a very extended period of time. FTX has the balance sheet to support these businesses, and it’s in their long-term vested interest to see this ecosystem survive.”

As Visible as His Hair

Crypto isn’t the only area where Bankman-Fried is focused on acting as a deep-pocketed savior. In May, he announced plans to spend $100 million to $1 billion to influence the outcome of the 2024 presidential elections.

That’s separate from his Washington, D.C., lobbying efforts, where his vast ball of hair has become an increasingly visible sight and influential presence as crypto steps up its attempts to influence both Congress and the Biden administration as they work on creating a regulatory framework that will determine the industry’s future.

See more: Crypto Industry Lobby Punching Above Its Weight Class

Well, mostly separate. Despite his protestations that the 2024 campaign contributions — so far mostly focused on supporting Democrats — aren’t crypto-related, nine-figure campaign donations are nearly unprecedented. That kind of checkbook pushes pretty much anything the donor is interested in up to the front of a lot of agendas.

More broadly, he has also been stepping up his promotion of the industry publicly, paying $135 million to put FTX’s name on the NBA’s Miami Heat arena and plunking down $6.5 million for a Super Bowl commercial.

Unlike fellow advertisers Coinbase and Crypto.com, FTX hasn’t announced big job cuts over the last month.

Also read: Super Bowl Curse Comes for Crypto as Layoffs Mount

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Anything that crypto can do, central bank digital currencies (CBDCs) can do better.

That is the broad conclusion reached by the Bank for International Settlements, which prereleased the long, crypto-focused chapter of its “2022 Annual Economic Report” on Tuesday (June 21). Hyun Song Shin, head of research and an economic adviser to the BIS, announced the release at a press conference, CoinDesk reported.

Arguing that cryptocurrencies have fundamental flaws that make them unsuitable as the basis of a monetary system, the BIS said that while tokenization and programmability are genuine advances, private, decentralized blockchains are not needed to reap their benefits.

These “can instead be built on top of central bank digital currencies (CBDCs), fast payment systems and associated data architectures,” the BIS concluded.

In doing so, the central-bank-owned financial institution has launched a direct attack on the core goal of all cryptocurrencies from bitcoin on: decentralization and the bypassing of financial intermediaries, most notably banks.

Read more: Blockchain Basics Series: What’s Bitcoin, and How Did It Get That Way?

“Rather than relying on central bank money and trusted intermediaries, crypto envisages checks and balances provided by a multitude of anonymous validators so as to keep the system self-sustaining and free from the influence of powerful entities or groups,” the report said.

Instead, it relies on decentralized finance (DeFi) platforms — of questionable decentralization — to replicate the services traditional financial institutions offer.

See also: DeFi Series: What Is DeFi?

However, there is “a vast gulf between the crypto vision and its reality,” the BIS said. “Contrary to the decentralization narrative, crypto often relies on unregulated intermediaries that pose financial risks.”

Stablecoin Flaws

But its structural flaws run deeper. The central bank argued that the “decentralization narrative” falls apart under scrutiny in a number of ways.

Most notably, the BIS pointed to dollar-pegged stablecoins and the central role they play in the cryptocurrency economy as proof of the inherent failures of cryptocurrencies like bitcoin.

Stablecoins like Tether’s USDT and Circle’s USDC are the lubricant of crypto trading, used in most cross-blockchain trades, and have recently begun to see broader use as a payment currency. They are also a way for speculators to park funds in a nonvolatile currency between trades.

“Providing the unit of account for the economy is the primary role of the central bank,” the BIS said. “The fact that stablecoins must import the credibility of central bank money is highly revealing of crypto’s structural shortcomings.”

The $45 billion collapse of the TerraUSD stablecoin and its partner token LUNA following a run “underscored the weakness of a system that is sustained by selling coins for speculation,” rather than on the trust in a central bank.

The need for stablecoins to bridge the gap between the 10,000 or more existing cryptocurrencies shows “another important structural flaw with crypto — namely the fragmentation of the crypto universe, with many incompatible settlement layers jostling for a place in the spotlight,” it said, adding that money is — or should be — “a coordination device that serves society through its strong network effects.”

Crypto’s Lessons

The BIS reveals a vision for the future of money, using CBDCs to “meld new technological capabilities” with the core trust provided by central banks’ fiat currencies.

With the trust in central bank money “at its core” combined with new digital technologies, it can make great strides in interoperability and network effects, allowing “new payment systems to scale and serve the real economy … [and] adapt to new demands as they arise.”

A public-private partnership built on the integration of crypto’s technologies with central banks’ trust “could make the monetary system more adaptable and open across borders,” it concluded. “A decade hence, users may take real-time, low-cost payments for granted, and payments across borders may be as seamless as the cross-border exchange they support.

“Consumer choice in financial services should be increased, and innovation will continue to push the frontiers of what is possible.”

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Crypto financial services provider CompoSecure is expanding its Arculus Wallet to support WalletConnect integration, non-fungible tokens (NFTs) and 16 new cryptocurrencies.

Ethereum-based NFTs are supported in a “galleries” section as part of the new, expanded capabilities offered within Arculus Wallet. Users can view, send and receive NFTs, enabling self-custody, and connect to the decentralized finance (DeFi) market through the WalletConnect integration, according to a press release Tuesday (June 21).

See also: Following Crypto Crash, Search for the Bottom Begins in Earnest

Connecting to DeFi exchanges gives users access to decentralized applications (DApps) and functions such as crypto-to-crypto transfers, lending and borrowing. 

“We consistently monitor user feedback in an effort to ensure we deliver the strongest product offering for our customers,” said Jon Wilk, CEO of CompoSecure. “We have added a tremendous amount of new functionality into the Arculus Wallet, enabling it to be a secure gateway to easily and conveniently access the decentralized Web3 world.”

Read more: PayPal Opens Door to Outside Crypto Wallets

“With the simple touch of an Arculus Key™ Card, users can unlock access to their DeFi and NFT worlds in addition to managing their cryptocurrency assets. We continuously strive to meet the needs of the market through well-designed, secure and elegant solutions that deliver peace of mind,” Wilk continued.

Founded in 2000 and headquartered in Somerset, New Jersey, CompoSecure went public last year. The company offers financial payment cards, as well as cryptocurrency and digital asset storage and security solutions.

Related: Treasury Dept Sec: Crypto Wallet ID Rules Will Allow Innovation

In 2021, CompoSecure introduced the complementary Arculus Key Card and the Arculus Wallet App. The digital wallet is secured by a three-factor authentication security solution, which includes biometric info, a private 6-digit PIN and the Arculus Key Card.

The solution enables users to securely store, buy, swap, send and receive cryptocurrency, NFTs and other digital assets. It also uses intuitive controls and a “tap to transact” metal payment card to manage multiple digital assets in one place, according to the release.

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Cryptocurrency lending startup BlockFi secured a $250 million credit line with cryptocurrency exchange FTX to bolster its balance sheet and provide long-term stability.

BlockFi CEO and co-founder Zac Prince said in a press release on Tuesday (June 21) that the credit facility strengthened the company’s commitment to its clients and to the protection of their funds.

He added that the agreement “unlocks future collaboration” between both firms and is also a “significant step forward,” as both BlockFi and FTX continue supporting the “strength and accessibility of cryptocurrency markets.”

See also: Sam Bankman-Fried’s FTX Aims to Become the ‘Everything App’

Headquartered in Jersey City, New Jersey, and co-founded in 2017 by Prince and SVP of Operations Flori Marquez, the startup provides credit services to markets with limited access to simple financial products and pairs competitive rates with institutional-quality benefits.

BlockFi is striving to connect cryptocurrencies to traditional financial and wealth management products, with the goal of advancing the overall digital asset ecosystem for individual and institutional investors, according to its website.

Read more :FTX Founder Says Bitcoin Fails as Payments Network

“BlockFi’s team has always demonstrated a strong bias towards prudent risk management and swift action. Protecting customer assets is their top priority, which allows them to operate from a position of strength,” said Samuel Bankman-Fried, CEO and co-founder of FTX.

The credit facility term sheet is pending the finalization of documents, anticipated in the next few days, per the release. 

Related: Bankman-Fried Bails Out Crypto Broker Voyager and Blames Fed for Downturn

Bankman-Fried’s Alameda Research extended a $200 million credit facility to crypto broker Voyager last week. The facility is in a mix of cash and the USDC stablecoin, and will also include a revolving line of credit for 15,000 bitcoins, which were worth around $285 million as of Saturday (June 19). 

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As bitcoin crashed well below the psychologically important $20,000 mark over the Juneteenth holiday weekend, bottoming out at levels not seen since the very beginning of the crypto bull market in November 2020, fears are growing that it will get a lot worse before it gets better.

Pointing out that just like the traditional equities markets, bitcoin has been propped up by the Federal Reserve dropping in the past two years, Bloomberg Intelligence analyst Eric Balchunas told Decrypt that’s not going to happen again anytime soon.

“In every past selloff there was this thought behind it that the Fed would step in if the market really needed it, and this time they’re not going to do that,” he said, adding that with an election coming and inflation skyrocketing to levels unseen in 40 years, “the Fed is serious this time.”

Without the Fed there to drop interest rates as the markets stumble, investors “are going to have to learn to live without the Fed, and that’s going to be painful,” he said. “It’s like coming off heroin — the first year is going to be rough.”

Growing Pessimism

With bitcoin having tumbled to $17,700 over the weekend, the price of the largest cryptocurrency tagged a 75% decline from its November 2021 high of about $68,700. And much of the cryptocurrency market has followed suit.

While BTC bounced back about $21,000 by Monday (June 20), it didn’t just break the psychologically important $20,000 mark — which bitcoin narrowly failed to reach in the 2017-2018 bull market — it smashed through it. That means there is very definitely some going back.

How low bitcoin can and will go is the question. Many analysts believe the answer is, lots.

“This is a dark winter ahead for crypto as the era of free money comes to an end with this weekend another brutal sell-off across the board,” Dan Ives, managing director and senior equity analyst at Wedbush Securities, told the Financial Times. “Risk assets are all getting thrown out the window.”

And Bloomberg noted that both Morgan Stanley and Goldman Sachs warned investors in the traditional markets that recession risks are still priced in for a mild downturn, rather than the severe one looking increasingly likely, “leaving them exposed to a further deterioration in expectations,” Goldman analysts said.

A Morgan Stanley spokesperson noted added that the “bear market will not be over until recession arrives or the risk of one is extinguished.”

Where’s the Bottom?

That matches many crypto analysts’ and investors’ belief that the worst is yet to come.

Saying that the Monday bounce isn’t a sign of good things to come, FxPro’s Alex Kuptsikevich told CoinDesk that until investors get used to the Fed’s tight money policy, “financial market pressures can quickly negate bounces in cryptocurrencies.”

Others told Decrypt that $16,000 or even $11,000 could be the new bottom, while Chris Terry, vice president at SmartFi, a decentralized finance (DeFi) lending platform, told CoinDesk that bitcoin needs to “take out all the short positions.”

This would mean about an 80% fall from the November highs, which he said would mean bottoming out around $12,000 to $13,000.

“The HODLer mentality is really being put to the test, and those that haven’t bailed yet may be as tempted as they’ve ever been,” added Craig Erlam, senior market analyst at FX broker Oanda, referring to bitcoin believers who say “hold on for dear life” despite market ups and downs.

Blockchain analytics firm Glassnode had a different perspective. Noting that as bitcoin hit $17,700 on Saturday (June 18 ), more than half of all bitcoins and wallets — 51% — were in the red.

“Historical bear market floors have bottomed between 40% and 45% of supply in profit,” the firm said on Monday (June 20).

However, bitcoin’s history goes no further back than 2009, and wasn’t widely known, held or worth enough to react to markets in any significant way until 2017. Inflation hasn’t been this high since 1982.

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Four days after freezing withdrawals, cryptocurrency lender Babel Finance announced Monday (June 20) on its website that it had “reached preliminary agreements on the repayment of some debts,” which “eased some of the company’s short-term liquidity pressure.”

The company continued: “Babel Finance will actively fulfill its legal responsibilities to customers and strive to avoid further transmission and diffusion of liquidity risks.” The firm did not indicate when it would resume allowing withdrawals of funds.

In announcing the halting of withdrawals and redemptions, Babel wrote in a notice to customers: “We are in close communication with all related parties on the actions we are taking in order to best protect our customers. During this period, redemptions and withdrawals from Babel Finance products will be temporarily suspended, and resumption of normal service be notified separately. We apologize sincerely for any inconvenience caused.”

Similar news: Babel Finance Stops Withdrawals

Less than a week before Babel’s halting of withdrawals, fellow cryptocurrency lender Celsius stopped withdrawals. The lender attributed its decision to “extreme market conditions.”

More here: Collapse of Crypto Lending Platform Celsius Points to Bigger Problems

Celsius offered investors extremely high returns and the lent funds it raised to borrowers, who used their own cryptocurrency holdings as collateral.

Separately, Babel posted a notice on its website Tuesday (June 21), reporting that the company’s Twitter account — @babelfinance — had been temporarily suspended because it was under internet attack from unknown sources. The notice also listed the handles of several Twitter accounts that seem to have been disguised to look like official Babel Finance accounts.

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The South Korean government has ordered current and former staff of Terraform Labs to stay in the country, Bloomberg reported Tuesday (June 21). The move is likely is an indication the government is ramping up its probe into the collapse of the TerraUSD stablecoin.

“Officials linked to the stablecoin’s collapse” have been told to stay in the country, a representative of a prosecutor’s office in Seoul said in the report, adding: “Departure bans are normally imposed to have them included for questioning.”

Yonhap News, which attributed its report to “legal sources,” reported that 15 people, including developers for a lending system call Anchor, are covered under the travel ban, the report stated. Also, Daniel Hong, a former Terraform developer, tweeted: “Stop asking me why i couldn’t make it to NYC frens, this is why: the Korean government imposed an exit ban for all ex-@terra money employees today.” He included in the tweet a copy of the government no-travel notice.

stop asking me why i couldn’t make it to NYC frens, this is why: the Korean government imposed an exit ban for all ex-@terra_money employees today pic.twitter.com/5Jds99ZNwQ

— Daniel Hong 🪄 (@unifiedh) June 20, 2022

Additionally, South Korean news station YTN reported that government officials have moved to revoke the South Korean passport of Terraform Co-Founder Do Kwon, who may live in Singapore now, according to the report. He could be required by South Korean law to return to the country to turn in his passport if it is revoked.

The U.S. Securities and Exchange Commission (SEC) is also investigating the collapse of TerraUSD — particularly the way the digital asset was marketed.

Read more: SEC Investigates TerraUSD Marketing

Both Terraform and Kwon had already been facing scrutiny from the SEC over the Mirror Protocol, another crypto project letting people trade digital assets tracking the price of U.S. stocks. Neither Terraform nor Kwon have been accused of wrongdoing in that case.

The collapse of TerraUSD in May destroyed about $45 billion in market value. TerraUSD blew up after its value dropped below $1, prompting a major sell-off.

See more: $45B Stablecoin Rout Confirms Worst Fears about Crypto’s Need for Reserves 

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