Tag Archives: contradictions

Building a Crypto Hub on Quicksand: The UK’s Regulatory Contradictions

Building a Crypto Hub on Quicksand: The UK’s Regulatory Contradictions

On paper, Britain wants to be a global center for digital-asset innovation. In practice, the way the government and the Financial Conduct Authority (FCA) are building the rulebook could smother the very ecosystem they claim to champion. The ambition is real. The execution, so far, is wobblier.

The Draft Statutory Instrument (SI) on crypto assets is a genuine milestone. It signals a desire to move past the reactive, enforcement-first posture that dogged the U.S. for years. Instead of waiting for firms to implode—or to break rules—the UK is attempting a structured, rules-based approach from the outset. That’s commendable. But good intentions don’t outweigh bad design or halting rollout.

Consider retail access. In August, the FCA green-lit crypto exchange-traded notes (ETNs) for UK investors—a cautious but welcome gesture toward mainstream exposure. Yet it still bars crypto exchange-traded funds (ETFs), even as the U.S., Canada, and parts of Europe have normalized them. The split is hard to justify. If ETNs are tolerable for retail, why not ETFs, which typically offer comparable exposure with greater transparency and liquidity? The inconsistency reads less like risk-based regulation and more like institutional inertia, and the mixed signals feed skepticism about what, exactly, the UK is trying to protect.

Then there’s decentralized finance. DeFi is no longer a boutique experiment; it’s a rapidly scaling pillar of the crypto economy, with billions locked across protocols that operate without central intermediaries. Yet the UK has drawn no clear line between DeFi and regulated centralized finance (CeFi). Without definitions and boundaries, firms don’t know when they fall under FCA oversight. That uncertainty is toxic to investment and hiring: startups hesitate to build, investors hesitate to allocate, and talent gravitates to jurisdictions where rules—strict or not—are at least legible.

The compliance burden compounds the problem. Take the proposal for automated tax reporting to HMRC. As an anti-evasion tool, it sounds sensible. But crypto’s founding ethos—privacy and user sovereignty—doesn’t vanish at the first sight of a spreadsheet. Requiring granular, near-real-time reporting from exchanges is likely to push privacy-conscious users offshore to less transparent venues, ironically heightening systemic risk. And the costs won’t be shared evenly: global incumbents can absorb new teams and bespoke systems; a London-based DeFi protocol or early-stage wallet provider may find the overhead prohibitive. Regulation should widen the field, not entrench the biggest players.

To its credit, the FCA has not tried to do this in a vacuum. Its Crypto Roadmap aims to phase in rules, consult widely, and avoid the blunt instruments seen elsewhere. The emphasis on operational resilience and anti-financial-crime controls is prudent. Crypto markets remain vulnerable to hacks, scams, and manipulation; insisting on basic hygiene borrowed from traditional finance helps professionalize an industry that has too often resembled the Wild West.

But professionalism isn’t the same as suffocation. The missing word in much of the current approach is proportionality. Not every firm presents the same risk profile. A non-custodial wallet developer should not face the capital and control obligations of a centralized exchange holding billions in customer assets. The Draft SI’s trajectory suggests a one-size-fits-all mindset that will send builders underground—or abroad.

Founders in the UK ecosystem are cautiously optimistic, but their optimism is conditional. They want regulation—clear, predictable rules calibrated to the realities of open-source software, smart contracts, and programmable finance. What they fear is a regime that looks progressive in speeches and consultation papers but functions, day to day, as a bureaucratic moat—shielding legacy finance while feigning enthusiasm for disruption.

Meanwhile, the global race is already on. After stumbling, the U.S. regained momentum with approvals of spot Bitcoin ETFs. The EU’s MiCA, for all its complexity, offers a comprehensive rulebook firms can plan around. Singapore and Switzerland—traditionally conservative—have cut discernible paths for digital-asset businesses. If the UK keeps moving in half-steps, opening one door while bolting the next three, it will drift from contender to spectator.

What’s needed now is less process theater and more decisions. Finalize the SI with workable definitions for DeFi. Rationalize the treatment of listed crypto products so ETFs and ETNs aren’t arbitrarily split. Build tiered, risk-scaled obligations so small non-custodial developers aren’t treated like systemically important custodians. And use the FCA’s Roadmap to publish guidance in gray areas quickly, rather than waiting for perfect legislation to catch up with imperfect reality.

Regulation that ignores how the industry actually operates will fail, however noble the preamble.

The UK has advantages others envy: deep financial expertise, credible courts, and a tech-savvy public ready to participate in a digital economy. But advantages are not entitlements. If the government and the FCA truly want a crypto hub, they must stop treating rules as barricades and start treating them as infrastructure—built thoughtfully, collaboratively, and with an eye on where finance is heading, not where it’s been. Otherwise, the next wave of financial innovation will break—just not on British shores.

 

Source: https://intpolicydigest.org/building-a-crypto-hub-on-quicksand-the-uk-s-regulatory-contradictions/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Gold at record highs, crypto on a knife’s edge: Contradictions in a risk-on world

Gold at record highs, crypto on a knife’s edge: Contradictions in a risk-on world

I see broad optimism coexists with deep structural vulnerabilities. At the heart of this dynamic lies the S&P 500, which remains technically constructive despite recent volatility. However, this strength is not evenly distributed. The rally is overwhelmingly concentrated in a narrow cohort of AI-linked equities, with AI-related stocks now accounting for 43 per cent of the index’s total market capitalisation.

This level of concentration creates a precarious foundation, as the overall health of the market hinges on the performance of a select few firms. Investors are increasingly discerning, favouring publicly listed companies with proven profitability over private, unprofitable ventures that promise future AI breakthroughs but lack current earnings.

This shift reflects a maturing of the AI investment thesis, where the market demands tangible monetisation rather than speculative potential. The upcoming 2026 earnings cycle will serve as a critical stress test, as these AI leaders must demonstrate a clear and scalable path to converting their technological edge into sustained revenue and profit growth.

This selective bullishness unfolds against a backdrop of a supportive macroeconomic environment. The 10-year US Treasury yield has recently dipped to 3.98 per cent, a level that signals a market expectation of a dovish Federal Reserve trajectory. Investors are now pricing in up to five rate cuts by September 2026, which would bring the Federal Funds Rate down to 2.75 per cent.

This anticipated monetary easing acts as a powerful tailwind for risk assets, providing a safety net that encourages investors to stay engaged in the market. Compounding this effect is the favourable seasonal trend that typically characterises the year-end period, creating a setup that is historically conducive to positive returns. Investor sentiment remains a study in contradictions.

While a significant 60 per cent of fund managers believe equities are overvalued, they are simultaneously positioned as “nervous longs,” maintaining high exposure to emerging markets, the highest level since February 2021. This barbelled strategy, which pairs long equity positions with investments in stable, high-yield sectors like telecoms and healthcare while simultaneously shorting the US dollar, reveals a deep-seated caution. Within this cautious framework, the utilities sector stands out as a “boring but brilliant” opportunity, with analysts anticipating double-digit earnings growth in the third quarter of 2025, offering a haven of predictable returns in an otherwise speculative market.

A key barometer of this fragile confidence is the price of gold, which has reached a record high of US$4,356.30 per ounce. This surge is primarily driven by persistent central bank buying, a trend that has been a cornerstone of the gold bull market that began in 2001. Historical analysis of that previous decade-long run suggests the current cycle may only be at its midpoint, providing a long-term bullish narrative.

However, the recent steepness of the price trajectory has raised alarms, as sharp corrections often follow such rapid ascents. The metal now sits at a critical crossroads, with its future path dependent on external geopolitical and political factors. A de-escalation of global tensions or a swift resolution to the US government shutdown would remove key drivers of safe-haven demand, posing a significant downside risk to the gold price.

The immediate catalyst for the latest market moves was a wave of positive quarterly earnings that alleviated fears about the health of the regional banking sector, thereby reviving global risk appetite. A significant policy development in Japan further amplified this positive sentiment. The Financial Services Agency has proposed a landmark reform that would allow domestic banks to buy, hold, trade, and custody Bitcoin and other digital assets, treating them similarly to traditional securities like stocks and government bonds.

This move is a seismic shift for a nation that has been a cautious but steady participant in the crypto space. Major institutions like Mitsubishi UFJ are already developing stablecoins, and this regulatory green light would create a powerful, regulated on-ramp for Japan’s over 12 million crypto account holders, channeling institutional capital directly into the market. This development was the primary driver behind the recent gains in Bitcoin and BNB, which are seen as the most direct proxies for institutional adoption.

The crypto market’s 0.78 per cent rise over the last 24 hours, however, tells a more complex story than just a bullish regulatory headline. The surge in perpetuals trading volume by 65.85 per cent to US$1.56 trillion, coupled with a 6.88 per cent decline in open interest, paints a picture of a market in flux. This data suggests that traders are actively closing out their highly leveraged positions in the wake of last week’s US$16 billion in liquidations, and are now cautiously re-entering the market with new, more conservative bets.

This is further confirmed by the sharp 152 per cent increase in funding rates over the past day, indicating a return of speculative interest, albeit a more measured one. From a technical perspective, the market found a crucial support level at the US$3.6 trillion market capitalisation mark, which corresponds to the 78.6 per cent Fibonacci retracement of its recent uptrend.

With the RSI-14 indicator exiting oversold territory at 33.21, many traders viewed the preceding seven-day, six per cent selloff as a prime buying opportunity. However, the lack of a broad-based rally, evidenced by a weak Altcoin Season Index of just 26, shows that this optimism is largely confined to the largest, most established cryptocurrencies.

In conclusion, the markets are navigating a delicate balance. The powerful, narrow rally in AI stocks and the supportive macro outlook provide a strong foundation, but the extreme concentration of risk and cautious investor positioning reveal an underlying fragility. The record gold price is a testament to lingering uncertainty.

At the same time, the crypto market’s reaction to Japan’s banking reforms shows how a single, well-targeted policy shift can ignite a new wave of institutional optimism. The critical question moving forward is whether these sector-specific catalysts can withstand a broader macroeconomic shock.

If US equity markets were to extend their losses following a wave of disappointing earnings from the more than 900 firms reporting this week, the pressure on Bitcoin to hold its key US$109,000 support level would be immense. The negative 24-hour correlation of -0.58 between crypto and the Nasdaq suggests that in a true risk-off scenario, the sector-specific bullish narrative from Japan may be quickly overwhelmed by the tide of broader market fear. The next few weeks will be a crucial test of whether the market’s current resilience is a sign of true underlying strength or merely a calm before a more significant storm.

 

Source: https://e27.co/gold-at-record-highs-crypto-on-a-knifes-edge-contradictions-in-a-risk-on-world-20251021/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

AI dreams, crypto magic and shutdown realities: The contradictions fuelling today’s market rally

AI dreams, crypto magic and shutdown realities: The contradictions fuelling today’s market rally

The current macro landscape presents a fascinating juxtaposition of caution and exuberance, where geopolitical friction and fiscal paralysis coexist with a surge in risk appetite driven largely by artificial intelligence optimism and institutional crypto adoption.

At the heart of this duality lies the extended US government shutdown now in its sixth day, a development that would typically trigger risk-off behaviour across global markets. Yet investor sentiment has not only held firm but advanced, propelled by a confluence of factors that underscore a deeper structural shift in how capital allocates across traditional and digital assets.

Wall Street’s mixed performance on Monday reflects this nuanced environment. The Dow Jones Industrial Average edged lower by 0.1 per cent, signalling lingering unease among industrial and legacy sectors. In contrast, the S&P 500 climbed 0.4 per cent and the Nasdaq surged 0.7 per cent, both reaching new all-time highs. This divergence is not random. The rally in chipmakers, companies at the epicentre of AI infrastructure development, has become the primary engine of equity market gains.

Investors are betting that the AI boom is not a fleeting narrative but a multi-year secular trend, and they are positioning accordingly. This tech-led optimism has spilt over into other risk assets, including cryptocurrencies, which posted a 1.43 per cent gain over the past 24 hours, extending weekly and monthly advances of 8.76 per cent and 12.58 per cent, respectively.

Simultaneously, traditional safe-haven assets are also rallying, which at first glance seems contradictory. Gold surged 1.9 per cent to a record high of USD3961 per ounce. This move is directly tied to the US government shutdown, which has injected fresh uncertainty into the coordination of fiscal and monetary policy. With Congress unable to pass a budget, questions linger about the government’s ability to manage debt, respond to economic shocks, or even maintain consistent data reporting, all of which erode confidence in the US dollar as a stable store of value.

The US Dollar Index rose modestly by 0.4 per cent to 98.11, but this uptick appears more technical than fundamental, especially as Treasury yields climbed amid global bond market turbulence. The 10-year yield rose 3.3 basis points to 4.152 per cent, pressured by soaring long-end Japanese yields and political instability in Europe. These crosscurrents illustrate how investors are simultaneously hedging against systemic risk while pursuing growth in high-conviction themes, such as AI and digital assets.

The crypto market’s recent strength cannot be divorced from this macro backdrop. Institutional demand has emerged as the dominant force behind the rally, with spot Bitcoin ETFs recording US$627 million in inflows over a 24-hour period and Ethereum ETFs adding US$307 million. Total assets under management in Bitcoin ETFs now stand at US$161.6 billion, while Ethereum ETFs hold US$25.73 billion. These are not speculative retail bets but deliberate allocations by traditional finance players who increasingly view crypto, particularly Bitcoin, as a macro hedge akin to gold.

The correlation between crypto and gold over the past 24 hours reached 0.74, a striking signal that both assets are being used interchangeably as hedges against inflation and policy uncertainty. This institutional embrace is occurring against a backdrop of cooling inflation data and growing expectations of Federal Reserve rate cuts in 2025, which lowers the opportunity cost of holding non-yielding assets like Bitcoin and gold.

The rally is not solely driven by fundamentals. Derivatives markets are amplifying price action through a surge in leveraged activity. Perpetual futures volume spiked 53.7 per cent to US$1.71 trillion in 24 hours, with funding rates jumping 475 per cent on a weekly basis to 0.0083 per cent. Binance alone accounted for 87 per cent of Bitcoin futures taker volume, underscoring its outsized role in price discovery.

While this derivatives frenzy fuels momentum, it also introduces fragility. Open interest, though near yearly highs, declined 1.24 per cent over the past day, a potential early warning sign of profit-taking or de-leveraging. With the 14-day Relative Strength Index for Bitcoin at 73.3, the market is entering overbought territory, increasing vulnerability to sharp corrections if sentiment shifts.

Adding another layer to this dynamic is the performance of Binance ecosystem tokens, which rose 0.97 per cent in 24 hours and 8.76 per cent for the week. BNB hit an all-time high of US$1,190, supported by the exchange’s record US$2.55 trillion in monthly futures volume and the launch of new AI-powered trading tools.

Binance’s dominance, capturing 41 per cent of global spot trading, provides a sense of stability to the broader crypto market, as its operational strength reassures participants during periods of macro stress. However, this leadership masks underlying retail fatigue. Active addresses across major blockchains have declined by 57 per cent since June, suggesting that while institutions and sophisticated traders are driving volume, everyday users remain on the sidelines. This dichotomy raises questions about the sustainability of the rally if it remains confined to professional players.

Looking ahead, several key inflection points could reshape the current trajectory. The most immediate is the October 18 decision on Grayscale’s Ethereum ETF application. An approval would likely unlock another wave of institutional capital, particularly from firms that have thus far remained cautious about direct crypto exposure.

Conversely, a rejection could trigger a short-term pullback, especially if it coincides with a slowdown in ETF inflows or a reversal in tech stock momentum. The Nasdaq’s performance remains critical, given the 0.72 correlation between crypto and the tech-heavy index. Should volatility return to US equities, perhaps triggered by renewed inflation concerns or a deeper fiscal crisis, the crypto market may struggle to decouple.

In sum, today’s market moves reflect a delicate balance between fear and greed, where institutional confidence in digital assets as a legitimate macro hedge is colliding with leveraged speculation and geopolitical uncertainty. The US government shutdown, rather than derailing risk appetite, has reinforced the case for alternative stores of value.

The very forces driving gains, ETF inflows, derivatives leverage, and exchange dominance, also create conditions for heightened volatility. As we navigate this complex environment, the interplay between traditional macro drivers and crypto-specific catalysts will determine whether this rally evolves into a sustained bull market or unravels under the weight of its own momentum.

For now, the data suggests that institutional adoption has fundamentally altered crypto’s role in the global financial system, transforming it from a fringe asset into a core component of modern portfolio construction.

 

Source: https://e27.co/ai-dreams-crypto-magic-and-shutdown-realities-the-contradictions-fuelling-todays-market-rally-20251007/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j