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Bitcoin’s Price Falls Below $20,000

The price of bitcoin lurched below $20,000, and below a level widely monitored by cryptocurrency enthusiasts, as a brutal selloff in crypto showed no signs of abating.

Bitcoin fell as low as $18,739.50 and stayed below $20,000 on Saturday, according to CoinDesk, losing 72% of its value from its high in November. Concerns about the Federal Reserve’s actions to tame higher-than-expected inflation have pushed both stocks and cryptocurrencies into a bear market. Big names in the industry, including

Coinbase Global Inc.,

the biggest cryptocurrency exchange in the U.S., have recently announced job cuts.

There is no specific significance to the $20,000 level, but the price slid below $19,783, a previous high water mark hit in 2017, according to Coinbase. Bitcoin bulls have long held that the cryptocurrency had in recent years entered a new stage of development and acceptance, and that it wouldn’t fall below that 2017 level.

“It will be a lot of pain for a lot of investors,” said Yuya Hasegawa, a market analyst at Japanese crypto exchange Bitbank Inc. People will lose confidence in the crypto market as a whole, but seasoned crypto investors and those who believe in its long-term prospects will see an opportunity to buy at discounted prices, he said.

Ether, another major cryptocurrency, fell below $1,000, briefly reaching $975.35 on Saturday, according to CoinDesk, its lowest level since January 2021.

Bitcoin’s slide from its record high of $67,802 in November has contributed to a roughly $2 trillion wipeout in the broader market. Crypto’s total market capitalization, which peaked in November at nearly $3 trillion, stood at around $840 billion Saturday—its lowest since January 2021, according to data provider CoinMarketCap.

Bitcoin traded around the $30,000 mark for most of May before dropping sharply again in June after a fresh inflation shock and worries about rising U.S. interest rates. Investors have been unloading assets seen as risky, such as cryptocurrencies and technology stocks.

Individual investors have received margin calls, with about $260 million of collateral pledged by about 80,000 retail traders liquidated over the past 24 hours, according to data provider CoinGlass. That compares with $1 billion earlier this week.

A growing number of previously highflying crypto firms have been feeling the pain in what has been dubbed a “crypto winter.” Cryptocurrency lender Babel Finance told customers Friday that it was suspending redemptions and withdrawals from all products, citing “unusual liquidity pressures.” One of the largest crypto lenders, Celsius Network LLC, hasn’t let users withdraw funds for roughly a week, citing extreme market conditions.

Cryptocurrency-focused hedge fund Three Arrows Capital Ltd. has hired legal and financial advisers to help work out a solution for its investors and lenders after suffering heavy losses from a broad market selloff in digital assets, the firm’s founders told The Wall Street Journal.

The surge in cryptocurrency valuations over the last two years was aided by big-name investments from companies such as

Tesla Inc.

and a period of lower interest rates during the pandemic that encouraged individuals stuck at home to buy riskier assets in the hopes of greater returns.

Interest-rate increases now being enacted by the Fed come at a time when blowups in some crypto projects have rippled across the ecosystem. So-called stablecoin TerraUSD broke from its $1 peg last month following intense selling pressure, leaving it and its original sister cryptocurrency Luna now nearly worthless. As its developers sought to defend TerraUSD’s peg, they sold bitcoin reserves, weighing on the price of it and other assets.

Crypto investors more recently have become concerned about a derivative of the cryptocurrency ether that is locked up until the Ethereum network transitions to a less energy-intensive model. So-called Lido-staked ether has been trading at a discount to ether itself recently.

“Crypto has enough problems. It doesn’t need the macro,” said Noelle Acheson, head of market insights at crypto lender Genesis Global Trading, in reference to rising interest rates and inflation concerns.

Write to Elaine Yu at elaine.yu@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com

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First bankers, now lawyers: cryptocurrency industry’s latest hiring frenzy

The cryptocurrency industry is ramping up efforts to recruit more legal talent as it faces increased regulatory pressure while looking to be accepted by and become part of mainstream finance.

Crypto exchanges and companies are poaching attorneys left and right, from both law firms and other crypto companies, bringing them in-house to help navigate an evolving regulatory landscape while helping to curb outside legal expenses, industry participants said. Law firms, which are sometimes losing their partners to in-house positions, are also building up their crypto practices to maintain that valuable expertise.

The increased demand for lawyers also marks a turning point for crypto, whose early supporters often expressed scepticism of regulation. The industry has been expanding rapidly with hopes of attracting more mainstream investment opportunities and many are embracing the stance that they want regulatory clarity.

“In [the crypto] space, the consensus is you need to have someone in-house early,” said John Wolf Konstant, a senior consultant at technology-focused legal recruiting firm Whistler Partners. “Especially since investors are going to require that, you need to have someone there to help chaperone the process and to make sure everything is buttoned up from the start.”

READ Meet six former bankers who quit for crypto: ‘My phone rings off the hook’

Competition is also driving up salaries in the crypto space at a faster rate than in the larger in-house legal market, particularly for senior-level positions, Konstant said. Total annual packages, including tokens and equity, can run into seven figures at the very top of the market, he added.

Marco Santori, chief legal officer of Kraken, tweeted in February that the San Francisco-based crypto exchange was looking to hire 30 lawyers in the next three months. He added that he would like to hire 60, “but honestly I don’t know how to get it done”.

“Kraken legal is fully on track with its hiring goals since my comments in February,” Santori said last week in an email. “We are attracting the best lawyers from both traditional finance and white-shoe firms. The brain drain is real and we couldn’t be happier with it.”

Lawyer Jorge Pesok recently joined crypto-based nonprofit HBAR Foundation, which gives out grants to projects, as its chief legal officer after about 10 months as general counsel and chief compliance officer at crypto exchange Tacen. Before Tacen, he was at law firm Crowell & Moring.

“The market is hot,” Pesok said, adding that he received four job offers before he chose HBAR, primarily because of its commitment to sustainability, and he wasn’t even looking for a new position. “Everybody is looking for talent,” he said, adding that for HBAR, even the simple grants it makes require help, given the nuances of cryptocurrency and the regulatory scrutiny around the industry.

Recruiter Whistler Partners said about 10% to 15% of all recent placements have been in the crypto or financial technology sectors, with firms hiring for both in-house counsel and law firm positions, according to Konstant, who himself was a lawyer before moving to the recruiting field. He said the firm was working on six to 10 in-house legal jobs in the blockchain or fintech space over the past year at any given time.

Konstant said there is a great deal of competition for all legal talent across sectors, where candidates for in-house roles may receive multiple offers. But “for the crypto space, it’s more pronounced,” he said, adding that there is a huge demand for those with specialised knowledge in crypto and previous experience working at law firms that specialised in crypto or having built in-house crypto-focused teams.

As with most other jobs, firms operating in the crypto sector would prefer to hire someone with some relevant direct experience, but most expect to train new legal staff on the job as they learn about the specific projects each firm does.

Gregory Lisa, who most recently was a partner at law firm Hogan Lovells in Washington DC, joined decentralised financed-focused company Element Finance as its first chief legal officer in December. Lisa, who previously worked as a regulator at the Financial Crimes Enforcement Network, said his new position at the 25-person startup, which builds open-source protocol for fixed- and variable-yield tokens, offers him the chance to focus on the growth of one company, versus a portfolio of clients as an external counsel. His responsibilities now include engaging with regulators and law enforcement and managing internal legal issues.

READ Why crypto firms are hunting for exec talent at Washington’s revolving door

“You really get a chance to write the script and to engage with companies at an early stage,” Lisa said, adding that he has also stayed on as a special adviser for Hogan Lovells to help with the transition.

Cathy Yoon joined crypto technology company MPCH at the end of March as its chief legal officer after less than a year as general counsel of crypto exchange INX. She said she had no intention of moving jobs, but was interested in helping build blockchain infrastructure that could more easily support and onboard additional blockchain assets, which isn’t possible currently. So far, her day-to-day work includes managing internal corporate matters, such as the structuring of legal entities and intellectual property issues, and facilitating meetings with potential investors and customers.

The increasingly competitive job market also demands more lawyers who are “very commercial,” Yoon said, since crypto companies want to bring in attorneys early on to brainstorm with tech teams on what problems their products are meant to solve. “There has been a shift from lawyers being seen as ‘keeping us out of trouble,’ to becoming important members of the management team,” she said.

READ Fintech Files: Meet the disrupters, how to make $1m in crypto, and a new arms race

Law firms, some already struggling with a shortage of talent, are beefing up their crypto services as well, sometimes looking to acquire a whole team from other firms.

Orrick Herrington & Sutcliffe is looking to build “a complete offering” of services for blockchain firms, from helping with entity formation to advising on regulatory issues, according to Daniel Forester, a partner at the firm and leader of its fintech practice. The law firm, with roots in the traditional technology sector, currently has about 20 partners leading its crypto-related work and is looking to lure current regulators and candidates or teams from other law firms or in-house positions, he said.

Facing increasing competition for legal talent, Forester said Orrick continues to focus on retaining employees, including those at the associate level. “There are more positions than people,” he said of the legal industry as a whole. “The key to long-term success is retention.

Write to Mengqi Sun at mengqi.sun@wsj.com

This article was published by The Wall Street Journal, part of Dow Jones


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Crypto Stocks Perform Worse Than Cryptocurrencies

The picks and shovels of the cryptocurrency world have been a worse bet lately than cryptocurrencies themselves.

The cryptocurrency market has been in selloff mode recently even as hundreds of millions of people now trade bitcoin, ether and other digital assets. Bitcoin is down 12% this year. Ether is down 19%. The entire crypto market has fallen about 19%, though prices are off their year lows, according to data from CoinMarketCap. 


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Washington Debates Cryptocurrency Rules, With Sights Set on Stablecoins

WASHINGTON—As Washington attempts to get its arms around the rapidly growing cryptocurrency industry, policy makers in the Biden administration and on Capitol Hill have identified stablecoins as an initial target for tighter regulation.

Often billed as one-to-one representations of a currency like the dollar, stablecoins have recently exploded in popularity as investors use them for trading other cryptocurrencies. There are dozens of stablecoins, though a handful pegged to the dollar account for most of the market value, which grew roughly 500% in the 12 months ending in October, according to a report from the Biden administration.


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Bitcoin Price Surges on Biden’s Crypto Executive Order

WASHINGTON—Bitcoin’s price rose after President Biden announced an executive order to study digital currencies, a move the industry welcomed and skeptics decried as delaying needed regulation.

The order, titled “Ensuring Responsible Development of Digital Assets,” directed agencies across the federal government to produce reports on digital currencies and consider new regulations. It outlined the risks cryptocurrencies pose to the economy, national security and climate, while also noting their possible benefits.

It also asked agencies to review the possibility of issuing a digital version of the dollar, tasking the Justice Department with assessing whether it would require new legislation and possibly preparing such legislation. Some central banks around the world have experimented with the concept to keep pace with private-sector payments innovations, and the Federal Reserve has already started to evaluate the possibility.

As details from the executive order leaked overnight, the price of

bitcoin,

the largest cryptocurrency, rose almost 9%. Bitcoin’s price was $41,910 Wednesday evening, according to CoinDesk.

While financial regulators have long taken a cautious view toward cryptocurrency, the executive order marked the first time the White House had weighed in formally.

Crypto advocates welcomed the absence of any imminent federal action in the order and its acknowledgment of the positive elements of the industry, such as fostering innovation and financial inclusion.

“We applaud the White House for recognizing this as a defining moment for U.S. innovation on the world stage,” said

Faryar Shirzad,

chief policy officer at the largest U.S. crypto exchange,

Coinbase Global Inc.,

in a series of tweets.

“We look forward to continuing our work with regulators and lawmakers,” he said.

The chief executive of Valkyrie Funds,

Leah Wald,

said she expects the order will lead to regulations that will further help the industry grow. “Clarity spurs adoption, and adoption leads to growth,” she said. Her firm sells crypto-focused exchange-traded funds.

The crypto industry has waged an intense lobbying campaign over the past year to stave off more-aggressive regulation of digital assets. A report this week by Public Citizen, a progressive advocacy group, said the number of cryptocurrency lobbyists nearly tripled in recent years, from 115 in 2018 to 320 in 2021. The sector’s lobbying expenditures rose to $9 million from $2.2 million.

Crypto skeptics see the executive order as a step back.

Lee Reiners,

executive director of Duke University School of Law’s Global Financial Markets Center, said it appears likely to delay any consequential policy decisions until after the midterm elections in November. In most cases, the White House is giving agencies at least 180 days to produce their reports.

“Leading up to this executive order, the narrative that had been circulating was that the administration was set to crack down on crypto,” Mr. Reiners said.

“This executive order is a complete 180 from that,” he said. “This is as close to an embrace of crypto as you could have hoped for from this Biden administration, if you’re pro-crypto.”

President Biden’s cryptocurrency executive order may have produced more questions than it has answered: What’s a central bank digital currency? How is it different from crypto? And why hasn’t the Fed introduced a digital dollar? WSJ’s Dion Rabouin explains. Photo composite: David Fang

Financial regulators have already been studying cryptocurrencies for years. The Treasury Department’s Financial Crimes Enforcement Network issued guidance in 2014 around cryptocurrency-payment systems. The Securities and Exchange Commission has taken scores of enforcement actions against individuals and entities in the sector, while the Commodity Futures Trading Commission set up an initiative to study cryptocurrency and other technological innovations in 2017.

A senior administration official noted that the White House held a number of “Crypto Sunday” events to gather feedback from stakeholders as it prepared the executive order. A White House spokeswoman didn’t immediately respond to questions about the events, such as how many were held or who participated.

SEC Chair

Gary Gensler

has said that many cryptocurrencies should be regulated as securities such as stocks and bonds, something that would involve strict disclosure requirements from issuers. Crypto firms have pushed for CFTC oversight, believing it would be easier to comply with.

Matt Kluchenek,

a partner at law firm Mayer Brown LLP, said Mr. Biden’s executive order appears unlikely to resolve such questions.

“Rather than provide direction with respect to who regulates what, the order calls for research, assessment and coordination within specified deadlines,” Mr. Kluchenek said. “Many market participants were hoping for more concrete direction.”

Industry lobbyists say that heavy-handed regulation would risk pushing more of the cryptocurrency market overseas. Some law-enforcement and national-security officials are reluctant to discourage use of cryptocurrencies such as bitcoin, saying they allow transactions to be traced more easily than cash.

“Ensuring that the U.S. remains the leader in global financial infrastructure for generations to come has never been more paramount for economic and national security interests,” said

Sigal Mandelker,

a former Treasury official in the Trump administration who is now a general partner at

Ribbit Capital,

a venture-capital firm invested in crypto. “The president’s recognition of that is an essential step in that direction.”

But investor advocates worry that the executive order will give an opportunity to dilute existing regulations.

“Silicon Valley and their army of new lobbyists may have feared the worst, and instead the White House is rolling out the welcome mat,” said

Tyler Gellasch,

executive director of the Healthy Markets Association, an investor trade group. “Politicians and lobbyists are likely to use this as an opening line to try to rewrite the securities, commodities and banking laws under the guise of better regulating crypto.”

Bitcoin, Dogecoin, Tether: Cryptocurrency Markets

Write to Paul Kiernan at paul.kiernan@wsj.com and Andrew Duehren at andrew.duehren@wsj.com

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Justice Department Installs New FBI Crypto Crime Unit

The Federal Bureau of Investigation is launching a unit dedicated to tracking and seizing illicit cryptocurrencies as part of a broader shift in focus toward disruption of international criminal networks rather than just their prosecution.

Deputy Attorney General Lisa Monaco said Thursday that the new team, called the Virtual Asset Exploitation Unit, will centralize the law enforcement agency’s cryptocurrency expertise and provide blockchain analysis, virtual asset seizure and training to the rest of the FBI.

“This FBI unit will combine cryptocurrency experts into one nerve center,” said Ms. Monaco, speaking at the Munich Cyber Security Conference.

Cryptocurrency has emerged in recent years as the primary means by which cybercriminals reap the financial rewards from cyberattacks. A February report issued by blockchain analysis company Chainalysis Inc. estimates that around $11 billion in cryptocurrency holdings at the end of 2021 had illicit sources. Law enforcement agencies have zeroed in on disrupting the economics of cybercrime as a key prevention tool, by recovering funds paid in ransoms or stolen by hackers and identifying hackers through transactions.

The FBI’s Virtual Asset Exploitation Unit will work with the Justice Department’s National Cryptocurrency Enforcement Team, a group of about a dozen prosecutors that Ms. Monaco established in late 2021.

The DOJ announced earlier Thursday that Eun Young Choi, a career federal prosecutor, will serve as the NCET’s first director.

The Justice Department also announced an international virtual currency initiative, through which it will help law enforcement authorities in other countries improve their techniques and abilities in cryptocurrency investigations, Ms. Monaco said.

International law enforcement agencies have helped in previous cybercrime investigations, she added. “We can’t do this alone,” she said.

The DOJ is taking additional measures to step up its cybercrime work with international law enforcement authorities. U.S. prosecutors handling significant cybercrime investigations will now be required to consult with department experts to identify foreign partners that could help, Ms. Monaco said. A new Justice Department cyber operations liaison will be embedded in Europe and work with U.S. prosecutors and European officials to speed up cases against top cybercriminals, she added. “International cooperation will not be an afterthought,” Ms. Monaco said.

Tonya Ugoretz, deputy assistant director of the FBI’s cyber division, said that international cooperation has already borne fruit.

“We’ve had some notable successes, not only in infrastructure takedowns but also arresting and extraditing some of the criminals behind this activity, as well as some notable virtual currency seizures,” she said while speaking at the same conference as Ms. Monaco.

On Feb. 8 the Justice Department said it seized around $3.6 billion worth of cryptocurrency stolen during a 2016 hack of an exchange. The value of the cryptocurrency at the time made it the largest financial seizure in the Justice Department’s history. Ms. Monaco said this and other efforts involving cryptocurrency seizures should encourage companies to report incidents as early as possible.

“If you report to us, we can follow the money and not only help you but hopefully prevent the next victim,” she said.

Federal prosecutors and investigators will also start looking for ways to disrupt cybercrimes before they happen, instead of waiting to charge perpetrators afterward, Ms. Monaco said. Authorities could, for example, seize servers used to carry out attacks or issue decryptors to help victims whose data is encrypted during an attack, she said.

Ms. Monaco said the efforts to disrupt cyberattacks before they occur will require a cultural shift similar to the Justice Department’s counterterrorism work after the Sept. 11, 2001, terrorist attacks in the U.S. The Justice Department will consider “all available tools” to disrupt hacking crimes and reduce risks to victims, she said, including sanctions, export controls and efforts with international partners and the private sector.

“We should be looking for success both inside and outside the courtroom. My message to cybercriminals is equally clear: The long arm of the law can and now will stretch much farther into cyberspace than you think,” she said.

Write to James Rundle at james.rundle@wsj.com and Catherine Stupp at Catherine.Stupp@wsj.com

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New York City Mayor Eric Adams to Convert First Paycheck to Cryptocurrency

Eric Adams, who was sworn in as New York City mayor this month, has said he would take his first three paychecks in cryptocurrency.



Photo:

Michael Brochstein/Zuma Press

New York City’s new mayor,

Eric Adams,

said his first paycheck will be converted into bitcoin and ethereum.

The paycheck, expected Friday, will be switched into cryptocurrency through the online platform

Coinbase Global Inc.

, he said Thursday.

“New York is the center of the world, and we want it to be the center of cryptocurrency and other financial innovations,” said Mr. Adams, who was sworn in as the city’s new mayor earlier this month. “Being on the forefront of such innovation will help us create jobs, improve our economy, and continue to be a magnet for talent from all over the globe.”

Coinbase users can transfer their paychecks into their Coinbase account through the platform’s direct deposit feature, according to the company’s website. The function allows users to convert some or all of that money into cryptocurrency. 

The price of bitcoin recently rose 2.6% to $43,000, according to CoinDesk. Ethereum rose 3%. Cryptocurrencies have fallen to start the year amid expectations the Federal Reserve will raise interest rates as early as March. 

The mayor’s move comes after he said last year he would take his first three paychecks in cryptocurrency. In a recent Siena College Poll, 63% of New York City voters had a favorable view of Mr. Adams, whereas 20% viewed him unfavorably. The poll was conducted from Jan. 9 to 13.

New York City’s mayor isn’t the only mayor who wants his salary in cryptocurrency.

Miami Mayor

Francis Suarez

tweeted in November that he was going to take his next paycheck in bitcoin. A spokeswoman for the mayor on Thursday said the mayor’s last four paychecks have been in bitcoin.

Many are calling decentralized finance, or DeFi, the “Wild West of finance.” This fast-growing industry aims to provide automated banking services for cryptocurrencies to everyone, with no middle men. But DeFi is still in its early stages, which means there are risks. WSJ explains. Photo illustration: Tammy Lian/WSJ

Write to Allison Prang at allison.prang@wsj.com

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Elon Musk Gives Dogecoin a Boost As Tesla Starts Accepting the Cryptocurrency for Payment

Elon Musk

said

Tesla Inc.


TSLA 1.69%

is accepting payment for some merchandise with dogecoin, a return for the electric-vehicle maker to acceptance of digital currencies for some payments.

The Tesla chief executive said in an early Friday tweet, “Tesla merch buyable with Dogecoin.” The company’s website showed some items, including one labeled a “Giga Texas Belt Buckle,” priced in the cryptocurrency. Tesla vehicles can’t be paid for with dogecoin.

Dogecoin surged more than 10% early Friday after Mr. Musk’s tweet, before giving back those gains.

Mr. Musk has a record of commenting on cryptocurrencies. Dogecoin’s value jumped late last year when Mr. Musk indicated Tesla would make some merchandise available for purchase using the payment form.

This year, billionaire CEO Elon Musk reached several milestones across Tesla, SpaceX and Starlink. WSJ reporters Rebecca Elliott and Micah Maidenberg break down some of his biggest moments in 2021 and what’s to come in 2022. Illustration: Tom Grillo

Tesla last year bought $1.5 billion of bitcoin. Mr. Musk also said at the time that the company would begin accepting payments in the cryptocurrency. It later suspended those purchases after Mr. Musk expressed concerns about high levels of fossil-fuel use for bitcoin mining.

Mr. Musk last year said that he and his rocket company, Space Exploration Technologies Corp., or SpaceX, hold bitcoin. The billionaire chief executive said he also owns ethereum and dogecoin, other cryptocurrencies, though those holdings are worth less than his bitcoin stake.

Dogecoin has been one of the most volatile cryptocurrencies. It was started in 2013 as a joke and is centered around a Shiba Inu internet meme. The value of the cryptocurrency surged last year and remains around 2,000% higher than a year ago.

Mr. Musk—the world’s richest person, according to the Bloomberg Billionaires Index—is closely associated with dogecoin. Almost a year ago, he tweeted a faux “Dogue” magazine cover to his millions of followers. He mentioned the currency again on Twitter a few days later, sending its value up 80% intraday, before paring gains.

Dogecoin made a cameo appearance last year in Mr. Musk’s “Saturday Night Live” hosting debut. In a satirical segment, Mr. Musk appeared as “The Dogefather.” After he expounded on the merits of the cryptocurrency using jargon, other cast members asked him to explain, “What is dogecoin?” Pressed, Mr. Musk eventually said, “Yeah, it’s a hustle.”

Write to Robert Wall at robert.wall@wsj.com

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