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Welcome to The Node! This is Marc Hochstein to take you through the latest crypto news. In today's news: Trump's election odds are not the dominant driver of bitcoin's price, data shows; election betting fever spreads to Solana; Coin Center scores a W in its battle with the IRS and Treasury; and a Dubai court orders a firm to pay an employee in crypto.
The Takeaway: China's "bitcoin ban" is more complicated than Justin Sun makes it sound, writes CoinDesk's Sam Reynolds. 👇 |
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Bitcoin Isn't a Trump Bet |
While the popular narrative suggests a strong positive link between bitcoin's recent price performance and Republican candidate Donald Trump's victory odds in the U.S. presidency rate, market data suggests otherwise. Since Trump's mid-June meeting with bitcoin miners, crypto market experts have consistently associated the Republican candidate's performance on betting markets with bitcoin's price. The narrative strengthened after Trump survived an assassination attempt in July and as BTC came under pressure early this month amid Democrat candidate Kamala Harris' resurgence in betting markets. However, prime broker FalconX's analysis of the three-day change in BTC's price and the three-day change in Polymarket odds of Trump winning the presidential election between June 1 and Aug. 15 shows a lack of definitive trend or clear correlation between the two variables. “Interestingly, there has not been a noticeable relationship between election odds and BTC prices throughout the entire analysis period from June 1 to August 15, 2024," David Lawant, head of research at FalconX, said in an email to CoinDesk. "One reason for these weaker-than-expected relationships could be the many crosscurrents influencing prices, such as the path of monetary policy in the U.S., concerns around upcoming supply overhangs, and others, as we highlighted before." |
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Crypto think tank Coin Center will get another shot at suing the U.S. Treasury Department over what it says is an “unconstitutional” amendment to the tax code that would require Americans to disclose the details of certain crypto transactions to the Internal Revenue Service (IRS). On Aug. 9, Circuit Judge Karen Nelson Moore of the U.S. Court of Appeals for the Sixth Circuit overturned an earlier decision by a U.S. District Court Judge – Judge Karen Caldwell of the Eastern District of Kentucky – to dismiss Coin Center’s lawsuit. Caldwell agreed to dismiss the case on issues of subject matter jurisdiction last July, ruling that her court did not have the authority to decide on the issues brought forth by Coin Center’s case because they were not yet “ripe” – a legal term meaning that a plaintiff has not satisfactorily argued that real harm has occurred, only that it could hypothetically happen in the future. The amendment to section 6050I of the U.S. code, which was enshrined in the $1.2 trillion Infrastructure Investments and Jobs Act passed in 2021, would legally require crypto users exchanging digital assets worth more than $10,000 to collect and share personal information – including their real names, Social Security numbers and home addresses – with both each other and the authorities. The amendment sparked a public outcry from many in the crypto industry, who saw the requirement as being antithetical to the ethos of crypto, where many users are pseudonymous, as well as a violation of their privacy and a potential government overreach. |
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Crypto's Bet on Election Bets Spreads to SOL |
Solana-based crypto trading platform Drift is adding prediction markets to its product lineup, placing a bet on Polymarket-style election betting, but with a few twists. The BET service will allow traders to bet on binary outcomes (Will Trump win the election? Will Harris win the popular vote?) using cryptocurrencies, much like Polymarket has done atop Ethereum and Polygon. Drift's rendition, though, will be more ingrained in decentralized finance (DeFi). Users will be able to make their picks using dozens of cryptos as collateral, instead of just USDC, and earn yield on that collateral ahead of the event's outcome, Drift co-founder Cindy Leow said. Users can also hedge their event-based forecasts with structured trades on the price action of various cryptos. Prediction markets are proving to be a breakout crypto use case this election cycle, with pundits in the mainstream media often citing Polymarket-derived statistics in their reporting. |
Dubai Court to Firm: Pay Worker in Crypto |
A Dubai court ordered a company to compensate a worker through a cryptocurrency token, as stipulated in the employment contract, a legal precedent that raises several questions even as it lends some legitimization to crypto in the region. The ruling does not, however, necessarily mean crypto is legalized for salary payments in general, two Dubai-based lawyers told CoinDesk. "The ruling merely recognises a specific Virtual Asset (EcoWatt Tokens) as being a legally valid part of a specific employee’s compensation package, indirectly implying that employee compensation packages may include Virtual Assets," said Ankita Dhawan, a senior associate at Métis Institute, a dispute-resolution think tank. "The ruling does not clarify which Virtual Assets. Would an approval from Dubai's Virtual Assets Regulatory Authority be required?" The order by Dubai's court of first instance is dated July 17. Under Dubai labor laws there is a 15-day appeal period. Given the private nature of legal proceedings in Dubai, neither the name of the plaintiff nor the company were revealed and it's not clear if an appeal has been lodged. |
The Takeaway: It's Complicated |
Tron's Justin Sun (pictured) recently posted on X: "China unbans crypto. What's the best meme for this?" which, in turn, fueled headlines like "Justin Sun’s Cryptic Post Sparks Crypto Community Speculation of China Lifting Bitcoin Ban" and "Justin Sun Sparks Rumours of China Lifting its Ban on Crypto." Bettors on Polymarket are writing off the prospect almost entirely, giving it a 10% chance of happening before the end of the year. The question of whether bitcoin is banned in China is a complicated one, and there's no absolute answer.
As CoinDesk reported earlier this year, while China has imposed significant restrictions on crypto activities, a court in Fujian province and a Chinese law firm have noted that certain actions, like holding and peer-to-peer trading, are not explicitly banned, highlighting legal gray areas that allow for continued crypto use. Beijing just doesn't want to normalize crypto trading in-country because it poses a threat to its strict capital controls, which are designed to regulate the flow of money in and out of the country to prevent currency flight and maintain the stability of the Yuan. This is also why mainland China traders aren't allowed to touch Hong Kong's crypto ETFs, which have in-kind redemption models. It looks like this isn't a market that Sun can pump.fun. – Sam Reynolds |
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