Coin Market

Will new US SEC rules bring crypto companies onshore?

Published

2 days ago

March 22, 2025

Once, long ago, cryptocurrency companies operated comfortably in the US. In that quaint, bygone era, they would often conduct funding events called “initial coin offerings,” and then use those raised funds to try to do things in the real and blockchain world.

Now, they largely do this “offshore” through foreign entities while geofencing the United States.

The effect of this change has been dramatic: Practically all major cryptocurrency issuers started in the US now include some off-shore foundation arm. These entities create significant domestic challenges. They are expensive, difficult to operate, and leave many crucial questions about governance and regulation only half answered.

Many in the industry yearn to “re-shore,” but until this year, there has been no path to do so. Now, though, that could change. New crypto-rulemaking is on the horizon, members of the Trump family have floated the idea of eliminating capital gains tax on cryptocurrency, and many US federal agencies have dropped enforcement actions against crypto firms.

For the first time in four years, the government has signaled to the cryptocurrency industry that it is open to deal. There may soon be a path to return to the US.

Crypto firms tried to comply in the US

The story of US offshoring traces back to 2017. Crypto was still young, and the Securities and Exchange Commission had taken a hands-off approach to the regulation of these new products. That all changed when the commission released a document called “The DAO Report.”

For the first time, the SEC argued that the homebrew cryptocurrency tokens that had developed since the 2009 Bitcoin white paper were actually regulated instruments called securities. This prohibition was not total — around the same time as The DAO Report’s launch, SEC Director of Corporate Finance William Hinman publicly expressed his views that Bitcoin (BTC) and Ether (ETH) were not securities.

To clarify this distinction, the commission released a framework for digital assets in 2019, which identified relevant factors to evaluate a token’s security status and noted that “the stronger their presence, the less likely the Howey test is met.” Relying on this guidance, many speculated that functional “consumptive” uses of tokens would insulate projects from securities concerns.

In parallel, complicated tax implications were crystallizing. Tax advisers reached a consensus that, unlike traditional financing instruments like simple agreements for future equity (SAFEs) or preferred equity, token sales were fully taxable events in the US. Simple agreements for future tokens (SAFTs) — contracts to issue future tokens — faced little better tax treatment, with the taxable event merely deferred until the tokens were released. This meant that a token sale by a US company would generate a massive tax liability.

Projects tried in good faith to adhere to these guidelines. Lawyers extracted principles and advised clients to follow them. Some bit the bullet and paid the tax rather than contriving to create a foreign presence for a US project.

How SEC v. LBRY muddied waters

All this chugged along for a few years. The SEC brought some major enforcement actions, like its moves against Ripple and Telegram, and shut down other projects, like Diem. But many founders still believed they could operate legally in the US if they stuck to the script.

Then, events conspired to knock this uneasy equilibrium out of balance. SEC Chair Gary Gensler entered the scene in 2021, Sam Bankman-Fried blew up FTX in 2022, and an unheralded opinion from Judge Paul Barbadoro came out of the sleepy US District Court for the District of New Hampshire in a case called SEC v. LBRY.

The LBRY case is a small one, affecting what is, by all accounts, a minor crypto project, but the application of law that came out of it had a dramatic effect on the practice of cryptocurrency law and, by extension, the avenues open to founders.

Judge Barbadoro conceded that the token may have consumptive uses but held that “nothing in the case law suggests that a token with both consumptive and speculative uses cannot be sold as an investment contract.”

He went on to say that he could not “reject the SEC’s contention that LBRY offered [the token] as a security simply because some [token] purchases were made with consumptive intent.” Because of the “economic realities,” Barbadoro held that it did not matter if some “may have acquired LBC in part for consumptive purposes.”

This was devastating. The holding in LBRY is, essentially, that the factors proposed in the SEC framework largely do not matter in actual securities disputes. In LBRY, Judge Barbadoro found that the consumptive uses may be present, but the purchasers’ expectation of profit predominated.

And this, it turned out, meant that virtually any token offering might be considered a security. It meant that any evidence that a token was marketed as offering potential profit could be used against you. Even the supposition that it seemed likely that people bought it to profit could be fatal.

Regulation and hope drove firms offshore

This had a chilling effect. The LBRY case and related case law destabilized the cryptocurrency project landscape. Instead of a potential framework to work within, there remained just a single vestige of hope to operate legally in the US: Move offshore and decentralize.

Even the SEC admitted that Bitcoin and ETH were not securities because they were decentralized. Rather than having any promoter who could be responsible for their sale, they were the products of diffuse networks, attributable to no one. Projects in 2022 and 2023 were left with little option but to attempt to decentralize.

Inevitably, the operations would begin in the United States. A few developers would create a project in a small apartment. As they found success, they wanted to fundraise — and in crypto, when you fundraise, investors demand tokens. But it’s illegal to sell tokens in the US.

So, their VC or lawyer would advise them to establish a foundation in a more favorable jurisdiction, such as the Cayman Islands, Zug in Switzerland, or Panama. That foundation could be set up to “wrap” a decentralized autonomous organization (DAO), which would have governance mechanisms tied to tokens.

Through that entity or another offshore entity, they would either sell tokens under a Regulation S exemption from US securities law or simply give them away in an airdrop.

In this way, projects hoped they could develop liquid markets and a sizable market cap, eventually achieving the “decentralization” that might allow them to operate legally as an entity in the US again.

Several crypto exchanges were incorporated in friendlier jurisdictions in 2023. Source: CoinGecko

These offshore structures didn’t just provide a compliance function — they also offered tax advantages. Because foundations have no owners, they aren’t subject to the “controlled foreign corporation” rules, under which foreign corporations get indirectly taxed in the US through their US shareholders.

Well-advised foundations also ensured they engaged in no US business activities, preserving their “offshore” status.

Presto: They became amazing tax vehicles, unburdened by direct US taxation because they operate exclusively offshore and are shielded from indirect US taxation because they are ownerless. Even better, this arrangement often gave them a veneer of legitimacy, making it difficult for regulators to pin down a single controlling party.

After the formation, the US enterprise would become a rump “labs” or “development” company that earned income through licensing software and IP to these new offshore entities — waiting for the day when everything would be different, checking the mail for Wells notices, and feeling a bit jumpy.

So, it wasn’t just regulation that drove crypto offshore — it was hope. A thousand projects wanted to find a way to operate legally in the United States, and offshore decentralization was the only path.

A slow turning

Now, that may change. With President Donald Trump in office, the hallways of 100 F Street in Washington, DC may just be thawing. SEC Commissioner Hester Peirce has taken the mantle and is leading the SEC’s Crypto Task Force.

In recent weeks, Peirce has expressed interest in offering prospective and retroactive relief for token issuers and creating a regulatory third way where token launches are treated as “non-securities” through the SEC’s Section 28 exemptive authority.

At the same time, evolutions in law are beginning to open the door for onshore operations. David Kerr of Cowrie LLP and Miles Jennings of a16z have pioneered a new corporate form, the decentralized unincorporated nonprofit association (DUNA), that may allow autonomous organizations to function as legal entities in US states like Wyoming.

Eric Trump has proposed favorable tax treatments for cryptocurrency tokens, which, though it might be a stretch, could offer a massive draw to bring assets back onshore. And without waiting on any official shifts in regulation, tax attorneys have come up with more efficient fundraising approaches, such as token warrants, to help projects navigate the existing system.

As a16z recently put it in a meeting with Commissioner Peirce’s Crypto Task Force, “If the SEC were to provide guidance on distributions, it would stem the tide of [tokens] only being issued to non-U.S. persons — a trend that is effectively offshoring ownership of blockchain technologies developed in the U.S.”

Maybe this time, they’ll listen.

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Coin Market

Bitcoin ETFs log first net inflows in weeks, while Ether outflows continue

Published

1 hour ago

March 24, 2025

Spot Bitcoin exchange-traded funds (ETFs) in the US snapped a five-week net outflow streak in the trading week ending March 21.

Bitcoin (BTC) ETFs clocked a net inflow of $744.35 million — the highest tally in eight weeks — extending their daily inflow streak to six consecutive days, according to data from SoSoValue.

US-based spot Bitcoin ETF net flows get back on track. Source: SoSoValue

Five funds contributed to the inflows, with the bulk coming from BlackRock’s iShares Bitcoin Trust (IBIT), which recorded $537.5 million. Fidelity’s Wise Origin Bitcoin Fund (FBTC) followed with $136.5 million.

The renewed inflows come after a bearish period for both the crypto market and the broader global economy, marked by growing concerns over escalating trade tensions and rising recession concerns.

In the weeks surrounding that date, Bitcoin ETFs recorded their largest net inflows of 2025: $1.96 billion in the week ending Jan. 17 and $1.76 billion the following week. Bitcoin (BTC) surged to an all-time high of $109,000 on Jan. 20, the inauguration day of US President Donald Trump.

Bitcoin later dropped into the $78,000 range amid the broader market correction. With the latest inflows — the strongest since January — the price rebounded to $87,343 at the time of writing, according to CoinGecko.

Bitcoin leaves Ethereum in the red zone

The same can’t be said for Ether (ETH) ETFs, which extended their weekly net outflow streak to four weeks.

Ethereum ETF net inflows continue slumping. Source: SoSoValue

During the week ending March 21, Ethereum funds saw a net outflow of $102.89 million, with BlackRock’s iShares Ethereum Trust ETF (ETHA) accounting for $74 million of that total.

Ether (ETH) was trading at $2,090 at the time of writing, up from below $2,000 — a level it fell beneath for the first time in over a year.

Still, there’s a bright spot for Ethereum, as institutions continue to deepen their exposure to the asset.

BlackRock’s BUIDL fund — which primarily invests in tokenized real-world assets (RWAs) — now holds a record $1.145 billion worth of Ether, up from approximately $990 million just a week earlier, according to Token Terminal. The fresh injection of ETH signals growing conviction from the world’s largest asset manager in Ethereum’s role as the leading infrastructure for real-world asset tokenization.

Market sentiment improves but investors remain cautious

Market sentiment on crypto has improved since the past week, with the Crypto Fear & Greed Index improving to 45% from 32 last week.

However, Singapore-based investment firm QCP Capital advises caution regarding the likelihood of a sustained breakout.

“Upcoming tariff escalations slated for 2 April could once again pressure risk assets,” QCP Cap said in a March 24 market analysis.

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Coin Market

RSI breaks 4-month downtrend: 5 things to know in Bitcoin this week

Published

2 hours ago

March 24, 2025

Bitcoin heads into the end of Q1 near two-week highs as trader sentiment diverges from improving technicals.

Bitcoin (BTC) market participants are positioned for a fresh BTC price dip, which could even form new multimonth lows.

PCE week coincides with the last full trading week of March, and risk assets are showing a hint of optimism.

When it comes to BTC price strength, RSI is increasingly demanding bullish continuation.

Bitcoin’s short-term holders are under pressure amid serious unrealized losses.

Stablecoin stocks on Binance hit record highs in what research hopes is a positive signal for investor confidence.

Bitcoin traders see downside reversal next

Bitcoin is nearing a rematch with two-week highs as the week gets underway, data from Cointelegraph Markets Pro and TradingView shows.

BTC/USD 1-hour chart. Source: Cointelegraph/TradingView

Among traders, however, the mood remains cautious.

Bulls have a lot to do in order to spark a reliable uptrend, they warn, and despite being up nearly 15% versus its multimonth lows from earlier this month, BTC/USD may well see a fresh drop.

“Market sentiment has been restored after hitting the short liquidations at $87.1k. Now, it could be a good opportunity for the MM to shake out the market again,” popular trader CrypNuevo wrote in his latest X analysis.

“We may see a pullback from here over the next 1-2 weeks, a retrace of this recovery.”

BTC liquidity chart. Source: CrypNuevo/X

CrypNuevo eyed downside liquidity nearer $80,000 as a potentially lucrative target, advising followers to “mind the risk.”

BTC/USDT 1-hour chart. Source: CrypNuevo/X

Fellow trading account HTL-NL described the near-term scenario as “not looking good” for bulls, eyeing $90,000 as a ceiling before a reversal kicks in.

Even among its more ardent supporters, the specter of the mid-$70,000 lingers. Arthur Hayes, former CEO of crypto exchange BitMEX, argues that BTC/USD could even advance to new all-time highs of $110,000 before crashing 30%.

LATEST: BitMex co-founder Arthur Hayes predicts Bitcoin will hit $110k before retesting $76.5k, claiming Fed is switching from QT to QE for treasuries and dismisses tariff concerns, citing “transitory inflation.” pic.twitter.com/VX3ORPyvii

— Cointelegraph (@Cointelegraph) March 24, 2025

“Again I still think we go lower before we make a run back to 88-90k resistance retest,” trader Roman meanwhile added on short timeframes.

Earlier, Cointelegraph reported on several key support trend lines in need of a reclaim as part of any BTC price recovery.

These included the 200-day simple and exponential moving averages, currently at $85,050 and $85,500, respectively.

BTC/USD 1-day chart with 200 SMA, 200 EMA. Source: Cointelegraph/TradingView

PCE week comes in the shadow of tariffs

The last full trading week of Q1 2025 gets underway with a hint of relief for risk assets as stocks end a four-week losing streak.

A wild ride for equities since the year began is finally coming to a close, and with it an even more volatile period for Bitcoin and crypto.

That said, more surprises could come before the quarterly candle close.

March 28 is the main date in traders’ diaries this week, hosting the February print of the US Personal Consumption Expenditures (PCE) index.

Known to be the Federal Reserve’s “preferred” inflation gauge, PCE came in below expectations last month, with the upcoming numbers broadly expected to be identical.

Citing the Fed’s own estimates, financial market research firm Bespoke saw positive developments for risk-on sentiment developing.

“The Fed’s inflation model currently estimates that headline and core for both CPI and PCE will all have 2-handles by March,” it observed last week.

“Makes room for further cuts.”

Fed target rate probabilities for June FOMC meeting. Source: CME Group

The latest estimates from CME Group’s FedWatch Tool meanwhile show market odds for interest rate cuts unchanged, with the June meeting of the Federal Open Market Committee (FOMC) as the likely timeframe for financial conditions to ease.

The US government’s reciprocal tariff arrangement, due to go live on April 2, could temper any optimism.

At a press conference following the latest FOMC meeting last week, Fed Chair Jerome Powell cited tariffs as a “driving factor” in increasing inflation expectations.

“You may have seen that goods inflation moved up pretty significantly in the first two months of the year. Trying to track that back to actual tariff increases, given what was tariff and what was not, very, very challenging. So, some of it,” he said.

“The answer is clearly some of it, a good part of it is coming from tariffs.”

RSI signals tease key BTC price breakouts

When it comes to early bull market continuation signals, Bitcoin is currently enjoying several classics at once.

These all hinge on the relative strength index (RSI), a key momentum indicator that is in the process of breaking out across both long and short timeframes.

Market observers are keenly eyeing bullish divergences on RSI, which on weekly timeframes is abandoning a downtrend in place since November 2024.

Originally spotted by trader and analyst Rekt Capital last week, the process is continuing, with RSI seeking to confirm the downtrend line as support before heading higher.

“The Daily RSI is showcasing early signs of retesting the Downtrend dating back to November 2024 as new support,” Rekt Capital wrote in his latest update on the topic.

BTC/USD 1-day chart with RSI data. Source: Rekt Capital/X

As reported by fellow analyst Matthew Hyland, BTC/USD has now confirmed a bullish divergence on the weekly chart for the first time since September last year.

BTC/USD 1-week chart with RSI data. Source: Matthew Hyland/X

Daily RSI meanwhile measured 51.4 at the time of writing — above its key midpoint and fighting to hit new two-month highs.

Bitcoin speculators face a profit waiting game

Bitcoin’s short-term holders (STHs) — newcomer entities hodling coins for up to six months — are “under increasing pressure,” onchain analytics firm Glassnode warned.

In its latest analysis on X, Glassnode showed substantial unrealized losses among the STH cohort, one traditionally more sensitive to short-term BTC price volatility.

“Unrealized losses have surged, pushing many STH coins underwater, nearing the +2σ threshold,” it noted alongside a chart that applies standard deviation to the performance of their holdings.

Bitcoin STH unrealized loss. Source: Glassnode/X

As Cointelegraph reported, recent trips to multimonth lows for BTC/USD have been accompanied by significant panic selling by these newer investors, with many choosing to exit their positions at a loss.

Zooming out, however, Glassnode observes that compared to historical extremes, current loss-making sales barely compete.

“The rolling 30-day realized loss for Bitcoin’s STHs has reached $7B, marking the largest sustained loss event of this cycle,” it continued.

“However, this remains well below prior capitulation events, such as the $19.8B and $20.7B losses in 2021-22.”

Bitcoin STH rolling 30-day realized loss. Source: Glassnode/X

Stablecoin reserves offer glimmer of hope

Further data points to a return of investor confidence in the largest crypto exchange, Binance.

As highlighted by onchain analytics platform CryptoQuant, the total ERC-20 standard stablecoin reserves on the exchange hit new all-time highs above $31.8 billion on March 21.

“Binance remains the exchange with the highest trading volumes, making this a significant development,” contributor Darkfost wrote in one of its “Quicktake” blog posts on March 23.

“There are several factors behind this increase, but the most important one is likely that investors on Binance remain confident and are preparing to enter, or re-enter, the market.”

Binance ERC-20 stablecoin reserve. Source: CryptoQuant

Darkfost acknowledged that Binance may be the source of additional liquidity as it prepares for a potential uptick in activity.

“Nonetheless, seeing these stablecoins remain on Binance is generally a positive signal for the market,” he concluded.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Coin Market

DWF Labs launches $250M fund for mainstream crypto adoption

Published

2 hours ago

March 24, 2025

Dubai-based crypto market maker and investor DWF Labs launched a $250 million Liquid Fund to accelerate the growth of mid- and large-cap blockchain projects and drive real-world adoption of Web3 technologies.

DWF Labs is set to sign two investment deals worth $25 million and $10 million as part of the fund.

The initiative aims to grow the crypto landscape by offering strategic investments ranging from $10 million to $50 million for projects that have the potential to drive real-world adoption, according to a March 24 announcement shared with Cointelegraph.

Source: DWF Labs

The fund will focus on blockchain projects with significant “usability and discoverability,” according to Andrei Grachev, managing partner of DWF Labs.

“We’re focusing our support on mid to large-cap projects — the tokens and platforms that typically serve as entry points for retail users,” Grachev told Cointelegraph, adding:

“However, good technology and utility alone isn’t sufficient. Users first need to discover these projects, comprehend their value and develop trust.”

“We believe that strategic capital, coupled with hands-on ecosystem development, is the key to unlocking the next wave of growth for the industry,” he said.

Similar incentives may bring more capital for developing blockchain projects and lead to more sophisticated blockchain use cases. The fund comes over a month after the 0G Foundation launched an $88 million ecosystem fund to accelerate projects creating AI-powered decentralized finance (DeFi) applications and autonomous agents, also known as DeFAI agents.

New blockchain users need reliable infrastructure: DWF Labs

New users need robust, functional infrastructure when interacting with their first blockchain-based application.

“This approach ensures that when new users enter the space, they’re met with reliable infrastructure, strong communities, and meaningful use cases—not friction,” Grachev said, adding:

“It’s about creating the conditions for real, sustained adoption and helping the next wave of users not just arrive onchain — but stay.”

To ensure projects launch with solid infrastructure, each investment will offer ecosystem growth strategies, including developing lending markets, amplifying brand presence and supporting the project’s stablecoin growth and DeFi activities to “deepen liquidity.”

Other industry leaders have blamed the friction in blockchain applications for a lack of mainstream adopters.

The current user onboarding process is complicated and riddled with friction points, which is the main issue for mass crypto adoption, according to Chintan Turakhia, senior director of engineering at Coinbase.

Speaking exclusively to Cointelegraph at EthCC, Turakhia said:

“If our goal is to bring in the next billion users — and let’s start with just 100 million — we have to take all those friction points out.”

Some of the most pressing friction points include setting up a wallet with a complicated seed phase, paying transaction fees and buying blockchain-native tokens to transact on a network.

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