FTC Warns of New Crypto Scam, PayPal Explores Its Own Stablecoin, Binance CEO Joins Ranks


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Bitcoin dropped below $40,000 Monday — the first time it’s been that low since August. Ethereum had a bad day too, dropping below $4,000 for the first time since September. 

While both had risen back above those benchmarks by Tuesday, they extended a downward trend that started in late December. Some experts say this could be a low point related to recent news from the Federal Reserve that it will begin to pare back measures that prop up the economy amid growing inflation and economic recovery. 

These recent drops in price have followed a disappointing December jobs report last week, as well as a release last week of minutes from the Federal Reserve Board’s December meeting, which signaled a winding down of monetary measures to boost the economy as it continues to improve.  There was also a massive sell-off of Bitcoin futures, according to a CoinDesk report.

Meanwhile, PayPal is considering launching its own stablecoin. Binance CEO Changpeng “CZ” Zhao has reportedly become one of the world’s richest billionaires. And there’s a new scam on the rise involving cryptocurrency ATMs.

Here’s more on the latest crypto news that investors should know about:

  • The Federal Trade Commission is warning consumers about a “new spin” on crypto scams. The U.S. consumer protection agency says scammers are calling people pretending to be from the government, law enforcement, or a local utility company and luring people to send them money through cryptocurrency ATMs. The FTC’s warning comes in the midst of rising cryptocurrency crimes. In 2021 alone, scammers took $14 billion worth of crypto, according to a recent report from blockchain data firm Chainalysis.
  • PayPal may launch its own stablecoin as it grows its footprint in the crypto sector, CoinDesk reported. A PayPal spokesman told CoinDesk in an emailed statement that the company is “exploring a stablecoin,” and will work closely with regulators if they move forward with the idea. PayPal has been actively growing its crypto business recently, increasing the amount of crypto its customers can purchase, as well as investing in educating its users on crypto and working to allow them to withdraw their crypto safely to third-party wallets.
  • Changpeng “CZ” Zhao, CEO of crypto exchange Binance, has an estimated net worth of nearly $100 billion, according to new calculations from the Bloomberg Billionaires Index published. In terms of wealth, that puts him in the company of Facebook founder Mark Zuckerberg and Google founders Larry Page and Sergey Brin. The Binance coin makes up the “majority” of his net worth, according to an interview with the Associated Press last November.

Bitcoin is the largest cryptocurrency by market cap, and a good indicator of the crypto market in general, since other coins like Ethereum (and smaller altcoins) tend to follow its trends. Even though Bitcoin recently set another new all-time high, it was a pretty normal uptick for the crypto, which is notorious for its volatility. That’s not to say investors should take swings in either direction lightly, and this is also why investing experts recommend not making any major investment changes based on these normal fluctuations.

Cryptocurrency is still very new, and everything from innovation to regulation can have outsize impact for investors. Here’s how you can invest smartly, regardless of what’s making news or Bitcoin’s price swings.

How Investors Should Deal With Volatility

Cryptocurrency volatility is nothing new, and you should be comfortable with this if you decide to invest. 

Volatility can be attributed to an “immature market,” says Ollie Leech, learn editor at Coindesk, a cryptocurrency news outlet. Anything from a celebrity tweet to new federal regulation can send prices spiraling. 

“If Elon Musk puts hashtag Bitcoin in his Twitter bio, it sends Bitcoin up 10%,” says Leech. 

This unpredictability is part of the reason why investing experts warn against investing huge amounts of your portfolio into a risky asset like crypto. Many recommend keeping your crypto holdings to less than 5% of your total portfolio

For new investors, day-to-day swings can seem frightening. But if you’ve invested with a buy-and-hold strategy, dips are nothing to panic about, says Humphrey Yang the personal finance expert behind Humphrey Talks. Yang recommends a simple solution: don’t look at your investment. 

“Don’t check on it. That’s the best thing you can do. If you let your emotions get too much into it then you might sell at the wrong time, make the wrong decision,” says Yang.

This is the traditional “set it and forget it” advice that many traditional long-term investors follow. If you can’t get on board, and the extreme dips continue to cause you worry, then you might have too much riding on your cryptocurrency investments

“The most important thing any investor can do, whether they are investing in Bitcoin or stocks, is not just to have a plan in place, but to also have a plan they can stick with,” says Douglas Boneparth, a CFP and the president of Bone Fide Wealth. “While buying the dip might be attractive, especially with an asset that you really like, it might not always be the best idea at the moment.”

Other Recent Crypto News

  • Scammers took a record $14 billion worth of cryptocurrency in 2021, up from $7.8 billion in 2020, according to blockchain data firm Chainalysis’ 2021 “Crypto Crime Report.” While that’s a big jump in criminal crypto activity, the widespread adoption of crypto by legitimate individuals and institutions actually pushed the total percentage of illicit cryptocurrency transaction volume as low as it’s ever been, the report says.
  • Kosovo’s government introduced a ban on cryptocurrency mining in an attempt to limit electricity consumption, according to a Reuters report. The country is currently facing the worst energy crisis in a decade due to coal-fired power plant outages and high import prices.
  • Matt Damon has people riled up on social media, this time for starring in an ad for a crypto-trading app in which he compares buying crypto to some of history’s greatest achievements — from mountaineers ascending Mt. Everest to astronauts exploring space. Damon is the latest example of celebrities, from Kim Kardashian to Tom Brady, hyping crypto.
  • Crypto exchanges Crypto.com and FTX both planning to run ads during the Super Bowl, the most watched annual television event in the country, according to a report by the Wall Street Journal. It’s further evidence of cryptocurrency businesses looking to capitalize on growing interest by mainstream audiences.
  • Kevin Durant and his company Thirty Five Ventures signed a multiyear marketing deal with Coinbase, according to reporting by sports business news site Boardroom.TV. Brooklyn Nets star Durant will help promote the crypto exchange across his businesses and become a prominent advertising face of the brand. Durant’s partnership with Coinbase is the latest example of high-profile athletes jumping on the digital-asset wave.
  • Visa is launching new consulting and advisory services to advise its clients on crypto. The payments giant said recently in a press release that its crypto advisory practice will offer advice to financial institutions, retailers, and other firms to help them better understand “the crypto ecosystem.” While the move doesn’t directly affect consumers, it is further evidence that cryptocurrency is gaining more mainstream adoption within corporate America — which generally has a positive influence on the value of investors’ crypto holdings. 
  • The U.S. needs more crypto regulation, Gensler said once again in an interview with the Wall Street Journal that published recently. Cryptocurrency fits into the “broad remit” of the SEC, Gensler said in the interview. “I’ve said publicly, ‘Come in, work with the SEC, get registered.’ It’s really important to get that investor protection.” The comments echo remarks Gensler made to the SEC’s Investor Advisory Committee earlier this month.
  • Executives from Coinbase, Circle, Stellar, FTX, and other crypto companies testified at a congressional hearing recently. Led by Democratic California Rep. Maxine Waters, the hearing is titled “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States.” The U.S. House Committee on Financial Services has had a clear and growing focus on cryptocurrency and its risks to U.S. consumers and investors.
  • The Staples Center in Los Angeles — home of pro sports teams including the NBA’s Lakers and Clippers — will rebrand as the Crypto.com Arena starting Christmas Day, the Los Angeles Times reported Tuesday. Crypto.com will pay $700 million for the naming rights, the LA Times reported.
  • The infrastructure bill signed by President Biden includes provisions that firm up tax reporting requirements for cryptocurrency exchanges, which has implications for investors. “I think a lot of folks are in for a big tax surprise,” South Carolina-based CFP Grant Maddox told us previously.
  • The Biden administration has proposed legislation that would effectively treat stablecoin issuers as banks. Top U.S. officials have said for months that more cryptocurrency regulation was necessary, and this week’s report takes it a step further by defining what it could look like.
  • Jelena McWilliams, the chairwoman of the Federal Deposit Insurance Corporation (FDIC) told Reuters top U.S….

Read More: FTC Warns of New Crypto Scam, PayPal Explores Its Own Stablecoin, Binance CEO Joins Ranks

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