Two of the banks that were friendliest to the crypto sector and the biggest bank for tech startups all failed in less than a week. While cryptocurrency prices rallied Sunday night after the federal government stepped in to provide a backstop for depositors in two of the banks, the events sparked instability in the stablecoin market.

CNBC report explains that  Signature and Silvergate were the two main banks for crypto companies, and nearly half of all U.S. venture-backed startups kept cash with Silicon Valley Bank, including crypto-friendly venture capital funds and some digital asset firms.

The federal government stepped in on Sunday to guarantee all deposits for SVB and Signature depositors, adding confidence and sparking a small rally in the crypto markets. Both bitcoin and ether are nearly 10% higher in the last 24 hours.

According to Nic Carter of Castle Island Ventures, the government’s willingness to backstop both banks signifies that it’s back in the mode of providing liquidity, rather than tightening, and loose monetary policy has historically proven to be a boon for cryptocurrencies and other speculative asset classes.

But the instability once again showed the vulnerability of stablecoins, a subset of the crypto ecosystem investors can typically rely on to maintain a set price. Stablecoins are supposed to be pegged to the value of a real-world asset, such as a fiat currency like the U.S. dollar or a commodity like gold. But unusual financial conditions can cause them to drop below their pegged value.

Read more on CNBC.com 

The cryptocurrency-focused US lender Silvergate is to wind down its operations after it was hit by customer withdrawals following the collapse of crypto exchange FTX, The Guardian reports. 

The California-based bank had warned last week it was “less than well capitalised” after depositors demanding their money back, adding that it was evaluating its ability to operate as a going concern.

Silvergate said a voluntary liquidation of the bank was “the best path forward” in light of “recent industry and regulatory developments”. The failure of FTX sparked renewed volatility in the crypto markets. Silvergate also revealed it was being investigated by the US Department of Justice.

Its wind-down and liquidation plan includes full repayment of deposits, the bank added. Silvergate reported a $1bn (£840m) loss for the fourth quarter of 2022 after investors raced to withdraw more than $8bn in deposits, forcing it to incur losses as it sold assets to cover the cost of the withdrawals.

A online cryptocurrency scam in Egypt defrauded thousands of investors of around $620,000, Al Jazeera reported on Monday, citing state media.

Authorities have arrested 29 people, including 13 foreign citizens, in connection with the fraudulent platform known as "HoggPool."

The scheme first appeared in Egypt in August, promising investors large profits from crypto mining and trading.

Crypt trading in 2018 was declared forbidden in Egypt under Islamic law. While that religious decree was not legally binding, a de facto ban has been in place thanks to prohibitive banking laws introduced in 2020.

Source: CoinDesk 

UK banks are getting tougher on customers using crypto. In the past week, two of the country’s biggest banks—Nationwide and HSBC—cracked down by applying daily limits for buyers or restricting credit cards from making crypto purchases, Decrypt reports. 

These two banks aren’t the only ones: a number of banks over the past year have got tougher. Some took a tougher stance following the collapse of mega digital asset exchange FTX back in November. 

Major high-street bank Nationwide this week said it was setting up new restrictions to “help protect you and to try and keep your money safe.” Customers can no longer buy crypto with credit cards and with debit cards, and there are daily limits of £5,000 ($5,965). 

Read the full article to find our which banks allows customers to buy crypto. 

Ras Al-Khaimah, in the United Arab EMirates, on Monday announced plans to launch a free zone for digital and virtual asset companies to be known as the Digital Assets Oasis, reports Arab News.

Sheikh Mohammed bin Humaid bin Abdullah Al-Qasimi, chairman of RAK ICC, commented: 

We are proud to further the UAE’s position as a primary destination for innovation with the launch of RAK Digital Assets Oasis. We are building the free zone of the future for the companies of the future,

“As the world’s first free zone solely dedicated to digital and virtual asset companies, we look forward to supporting the ambitions of entrepreneurs from around the world with our progressive, supportive and quick-to-adapt approach, and our innovation-enabling environment.”

According to a statement released by the government on Monday, the Digital Assets Oasis will be the first example in the world of a “purpose-built, innovation-enabling free zone for nonregulated activities in the virtual assets sector.”

Cryptocurrency should, in general, not be granted legal tender status, the International Monetary Fund’s (IMF) Executive Board said in a statement Thursday.

The board – 24 directors elected by the IMF’s member countries – earlier this month had been presented with a staff paper that warned of the risks crypto poses to monetary policy, tax collection, financial stability and consumer protection.

Directors generally agreed that crypto assets should not be granted official currency or legal tender status in order to safeguard monetary sovereignty and stability,

the statement said, calling for countries to clarify tax treatment and align with global standards.

Source: CoinDesk