Cryptocurrency lending firm Genesis, which is part of the Digital Currency Group, has said it has no immediate plans to file for bankruptcy after rumors suggested it was planning on doing so should it fail to cover a $1 billion shortfall caused by the collapse of FTX.

Lawmakers have sent a letter to investment giant Fidelity Investments, warning it against offering Bitcoin to its customers in the wake of the collapse of cryptocurrency exchange FTX.

The Bank of England’s deputy governor, Jon Cunliffe, has warned decentralized finance (DeFi) protocols do not yet produce an effective way to manage risks.  Speaking to an audience at the Warwick Business School, Cunliffe said that DeFi advocates’ claim that code can manage risk is unproven.

Top stories in the Crypto Roundup today:

• Crypto Lender Genesis Denies Bankruptcy Plans
• Lawmakers Urge Fidelity to Reconsider Bitcoin Retirement Plan
• Bank of England Unconvinced DeFi is Effective Way of Managing Financial Risk
• Chart of the Week: CEX vs DEX Spot Trading Volume November 2019-2022

Crypto Lender Genesis Denies Bankruptcy Plans

 

Cryptocurrency lending firm Genesis, which is part of the Digital Currency Group, has said it has no immediate plans to file for bankruptcy after rumors suggested it was planning on doing so should it fail to cover a $1 billion shortfall caused by the collapse of FTX.

Genesis has reportedly faced difficulties raising money for its lending unit and told investors it would have to file for bankruptcy if it could not raise funds. However, the company has said there are no immediate plans to file for bankruptcy. A Genesis spokesperson was quoted saying:

"We have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing.”

The lender is said to have approached crypto exchange Binance seeking an investment, with Binance deciding against it fearing a conflict of interest down the line.

Genesis suspended customer redemptions in its lending business earlier this month, citing the sudden failure of FTX. Crypto exchange Gemini, whose earn product relies on Genesis, was also affected.

Lawmakers Urge Fidelity to Reconsider Bitcoin Retirement Plan

Lawmakers have sent a letter to investment giant Fidelity Investments, warning it against offering Bitcoin to its customers in the wake of the collapse of cryptocurrency exchange FTX.

Senators Elizabeth Warren of Massachusetts, Tina Smith of Minnesota and Richard Durbin of Illinois all signed the letter, which specifically asked Fidelity to drop its 401(k) Bitcoin plan. Fidelity is the largest 401(k) account provider in the United States.

In April, the firm launched a new product offering companies and their participating employees access to the flagship cryptocurrency,  with lawmakers telling the firm the move was a bad idea in May. The letter lawmakers have now sent reads:

“Once again, we strongly urge Fidelity Investments to reconsider its decision to allow 401(k) plan sponsors to expose plan participants to Bitcoin. The recent implosion of FTX, a cryptocurrency exchange, has made it abundantly clear the digital asset industry has serious problems.”

The letter adds the industry is “full of charismatic wunderkinds, opportunistic fraudsters, and self-proclaimed investment advisors promoting financial products with little to no transparency.”

Bank of England Unconvinced DeFi is Effective Way of Managing Financial Risk

The Bank of England’s deputy governor, Jon Cunliffe, has warned decentralized finance (DeFi) protocols do not yet produce an effective way to manage risks.  Speaking to an audience at the Warwick Business School, Cunliffe said that DeFi advocates’ claim that code can manage risk is unproven.

Cunliffe compared DeFi protocols to driverless cars by saying that they were only as good as the rules, programs, and sensors that organize their operations. He added:

''Moreover, it is not clear the extent to which these platforms are truly decentralized. 'Behind these protocols typically sit firms and stakeholders who derive revenue from their operations. Moreover, it is often unclear who, in practice, controls the governance of the protocols.''

The Bank of England is set to hold a consultation on the regulatory framework around a digital asset payment system next year. The UK Treasury will also do a consultation on how to extend investor protection, market integrity, and other regulatory frameworks, according to Cunliffe.

Chart of the Week: CEX vs DEX Spot Trading Volume November 2019-2022

Historically, the spot trading volume on centralized exchanges (CEXs) have dwarfed their decentralized exchange (DEX) counterparts with the latter recording their highest market share of 9.57% in January 2022.

With users' confidence in CEXs shaken following the collapse of FTX, crypto enthusiasts are speculating on increased adoption of DEXs in the coming month.

State of the Crypto by Top Tier Exchange Volume

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