Bitcoin (BTC) has started October with an impressive surge, defying the ongoing US government shutdown that has left alternative digital asset exchange-traded fund (ETF) applications stalled. While the cryptocurrency community celebrates the arrival of “Uptober,” which has historically been a strong month for Bitcoin, external headlines continue to be dominated by regulatory actions and significant legal proceedings.
During the past week, Bitcoin climbed above $120,000, marking a notable performance as the US government shutdown entered its third day. The standoff emerged after lawmakers failed to reach a funding agreement, but it has not significantly affected traditional markets, which have seen modest gains compared to the cryptocurrency’s impressive rally. Analysts consider this shutdown particularly critical as it delays the release of essential US jobs data, a key indicator for investors anticipating the Federal Reserve’s monetary policy direction ahead of the FOMC meeting scheduled for late October.
The current government shutdown is anticipated to impede the Securities and Exchange Commission’s (SEC) review of routine applications, including proposals for crypto ETFs linked to major cryptocurrencies like Litecoin, Solana, and XRP. Although these delays may be frustrating, analysts remain optimistic regarding eventual approval.
In Brazil, the dynamic landscape for Bitcoin miners is notably different. Energy companies are actively courting miners to utilize surplus electricity, with reports indicating that local energy plants have been operating with up to 70% excess capacity. This approach contrasts sharply with the regulatory atmosphere for miners in other countries, notably China, which enacted a comprehensive ban in 2021, forcing many operations to relocate. The Brazilian strategy significantly highlights a unique perspective towards the mining sector, seeing it as an economic boon rather than a burden.
Conversely, in New York, the mood is less welcoming. A new bill proposed by State Senator Liz Krueger aims to impose a tiered excise tax on crypto mining operations based on their energy consumption. This proposed tax would range from $0.02 to $0.05 per kilowatt-hour, depending on the size of the operation, only exempting miners using 100% renewable energy. This development follows a two-year moratorium on fossil fuel-powered mining and could further elevate the already high cost of mining Bitcoin, especially as the median expense to mine one BTC is currently hovering above $70,000.
In the UK, two individuals have pleaded guilty following what is described as the world’s largest cryptocurrency seizure. Zhimin Qian, who orchestrated a multibillion-dollar Ponzi scheme, and her associate Hok Seng Ling, admitted to laundering the proceeds from the scam, which involved 61,000 BTC. Police seized these assets in 2018 after tracking down Ling, but the legal proceedings have led to questions about how victims of the scheme should be compensated. The discussion centers on whether restitution will be determined by the original amount lost or the current Bitcoin value, which has significantly increased since the time of the fraud.
Meanwhile, in Europe, scrutiny over stablecoins is intensifying as regulatory bodies raise alarms about the implications of private digital currencies. The European Systemic Risk Board (ESRB) has recommended a prohibition on stablecoins issued by firms that operate both within and outside the EU, reinforcing earlier warnings from European Central Bank (ECB) officials about potential risks to financial stability. This recommendation has already resulted in Tether’s USDt being delisted by various EU trading platforms due to non-compliance with existing regulations.
In a parallel development, nine major European banks have announced plans to collaborate on the launch of a euro-pegged stablecoin, aligning themselves with the ECB’s move towards a digital euro, which is also progressing with framework agreements with multiple technology providers. ECB representatives have suggested that a mid-2029 launch for the digital euro could be a realistic target.
As diverse global narratives surrounding cryptocurrency emerge, the interplay of regulatory measures and market dynamics continues to shape the landscape for digital assets in the coming months.
