Today in Crypto: Russian Finance Minister Eyes Legalizing Crypto Trading Through Banks; TurboTax to Allow Refunds in Crypto

During January’s intense cryptocurrency selloff, volumes also fell, which is an ill omen for exchanges trading the digital currencies, Bloomberg reported Thursday (Feb. 3).

Total spot volume fell to $1.8 trillion in January, a more than 30% drop from the month before and the lowest turnover since the close of 2020. Even at its intra-month peak of $91 billion on Jan. 24, trading was down almost 50% from the previous month.

“It’s just an exceptionally quiet, fearsome and uncertain time in crypto,” Ed Hindi, chief investment officer and co-founder of Tyr Capital, told Bloomberg.

“Smart money, as they say, doesn’t sleep, it doesn’t take holidays. But three-day traders in crypto, they do take a break, especially when they get hurt,” Hindi said, referring to industry jargon for institutional and other major players.

Meanwhile, Russia’s Minister of Finance, Anton Siluanov, has restated his ministry’s belief that cryptocurrency should be regulated rather than banned in Russia, and is now suggesting legalizing crypto trading through banks.

That report comes from CoinDesk, citing a report in Russian media, which says Siluanov made these suggestions in a letter to Prime Minister Mikhail Mishustin.

The ministry’s position is in contrast to Russia’s central bank, which has proposed banning crypto, although both agencies say crypto cannot become legal tender in Russia.

Siluanov argues banks can provide cryptocurrency exchange services, while other types of businesses can be licensed. Unlicensed businesses offering crypto services would be subject to criminal prosecution.

In other news, Stocktwits.com, a social media platform that was at the center of 2021’s retail trading bonanza, launched a crypto trading platform on Thursday.

As Reuters reported, Stocktwits, which has more than six million registered users, was among the one of the message boards used retail traders last year to drive up meme stocks GameStop and AMC, costing bearish hedge funds billions of dollars.

Stocktwits said it would offer its customers the chance to make their trades or portfolio public.

“While crypto is the first leg, it’s not where we stop,” said Stocktwits CEO Rishi Khanna.

Stockwits says it plans to unveil a U.S. equities trading by early in the next quarter, as well as trading in stock options, crypto derivatives and other asset classes in the future.

Meanwhile, TurboTax is working with Coinbase on a direct deposit program to send state and federal tax refunds to Coinbase accounts, giving customers the option of converting that money automatically into crypto.

“We’ve seen a rise in alternative investments, in a new class of investors beyond just high-income earners,” Randy Hellman of TurboTax’s investor segment told The New York Times on Thursday.

As the Times story notes, Coinbase views itself as an “on-ramp” to the crypto world and wants to make it easier for people by offering a variety of direct deposit options.

The company just launched a paycheck program in the U.S. and Eric Adams, the mayor of New York City, has said he would convert his first income in office from dollars to crypto.

Finally, the digital asset exchange Kraken says it is implementing next-generation auditing standards to let clients prove their bitcoin and ether balances are backed by real assets held in the exchange’s custody.

“Administered by Armanino LLP, the Proof of Reserves audit is the second of its kind conducted on our exchange since 2014, and it affirms that more than $19 billion worth of client bitcoin and ether is safely — and provably — on our platform,” Kraken said in a news release.

The company noted this includes the $3.5 billion in ether held in Kraken’s secure on-chain staking service, which it describes as the “industry’s leading ETH2 validator.”