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Hong Kong Plans Crypto Tax Breaks and Expanded Trading Platform Licenses by Year-End
Hong Kong’s Treasury chief announced plans to extend existing tax breaks to cryptocurrency investments by year-end, aiming to attract more crypto-focused funds and family offices. The city also expects to approve additional crypto trading platform licenses in the coming months, building on its recent licensing framework launched in June. Financial Secretary Paul Chan noted that the Securities and Futures Commission is currently reviewing several applications, with stablecoin legislation also in the pipeline. Additionally, Hong Kong’s Monetary Authority plans to consult further on regulations for OTC crypto trading and custodial services in 2024.
U.S. Prosecutors Probe Tether as Treasury Considers Potential Sanctions
U.S. authorities are conducting a criminal investigation into Tether to assess if third parties are using its stablecoin, USDT, for illegal activities such as terrorism financing, hacking, or sanctions violations, The Wall Street Journal reports. This probe, led by the Manhattan U.S. attorney's office, examines potential breaches of anti-money laundering regulations and sanctions laws. Meanwhile, the U.S. Treasury Department is considering sanctions on Tether due to alleged use of the stablecoin by sanctioned individuals and groups, including Russian entities and terrorist organizations. Tether’s CEO and spokesperson denied the allegations, dismissing them as speculation, and reaffirmed the company’s cooperation with law enforcement against misuse.
Bitcoin Call Options Demand Spikes for Post-Election Expiry, Says Deribit CEO
Derivatives traders are positioning for a post-election rally in bitcoin, with Deribit CEO Luuk Strijers noting that call options outnumber puts 2-to-1 for the Nov. 8 options expiry, just after the U.S. presidential election. Open interest for these options exceeds $2 billion, with dominant strike prices at $70,000, $75,000, and $80,000, suggesting bullish sentiment and anticipation of volatility. Strijers noted that implied volatility is expected to peak briefly post-election, indicating market confidence in a swift resolution. Meanwhile, Standard Chartered's Geoff Kendrick projects bitcoin could approach its previous all-time high of $73,000 on election day, based on trading volume and options strike data.
Trading Desk Insights
On Friday evening, Bitcoin dipped to a low of $65,500 following a Wall Street Journal article suggesting the DOJ was investigating Tether for potential sanctions breaches and anti-money laundering infractions. Tether refuted these allegations, which helped stabilize Bitcoin's price. Over the weekend, Bitcoin recouped its losses, now trading at $69,000. The market saw significant purchasing of SOL during this period.
In ETF movements, Bitcoin saw substantial interest with a notable inflow of $402 million on Friday, predominantly led by Blackrock, amid a spike in trading volume reaching a ten-day peak of $2.9 billion. Conversely, Ethereum witnessed a decline, with Grayscale seeing outflows of $19.2 million and no new inflows from other managers.
The upcoming week is filled with key economic data: JOLTS job openings report on Tuesday, Bank of Japan's interest rate decision on Wednesday, followed by the core PCE price index on Thursday, and culminating with the crucial non-farm payroll figures on Friday.
This week also features earnings announcements from five of the 'Magnificent Seven' tech giants—Alphabet, Microsoft, Meta, Amazon, and Apple—which are poised to influence market dynamics.
U.S. equity futures saw an uptick on Monday, fueled by anticipation of robust earnings from these technology behemoths, potentially driving indices to new records. Market sentiment was further bolstered by easing geopolitical tensions, as weekend airstrikes by Israel in Iran avoided hitting critical oil or nuclear sites, leading to a decrease in oil prices to around $67 per barrel.
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This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.
Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.
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