First Mover Asia: Blockchain-Enabled SIM Card for Crypto Investors Fuels Conflux Growth; Bitcoin Holds Near $27.3K After Fed Decision

Good morning. Here’s what’s happening:

Prices: Bitcoin and most other major cryptos fell after the Federal Reserve raised the interest rate 25 basis points and made clear that inflation remained its focus even after recent banking debacles.

Insights: In a Q&A with CoinDesk, the chief technology officer of smart contract platform Conflux says the company's blockchain-enabled SIM card (BSIM) offers security and convenience.

Prices

CoinDesk Market Index (CMI) 1,178 −30.9 ▼ 2.6% Bitcoin (BTC) $27,294 −820.7 ▼ 2.9% Ethereum (ETH) $1,738 −56.7 ▼ 3.2% S&P 500 3,936.97 −65.9 ▼ 1.6% Gold $1,972 +25.4 ▲ 1.3% Nikkei 225 27,466.61 +NaN ▲ NaN% BTC/ETH prices per CoinDesk Indices, as of 7 a.m. ET (11 a.m. UTC)

A Hopeful Day Ends With a Slump

The U.S. Federal Reserve took the apparent path of least resistance, raising the interest rate 25 basis points to quash investor hopes that it would turn more dovish in the aftermath of a banking crisis that has rocked confidence in traditional financial services firms and the strength of the U.S. dollar.

Bitcoin (BTC) dithered in the immediate aftermath of the bank's decision before edging down steadily, even dipping below $27,000. The largest cryptocurrency by market capitalization was recently trading at $27,375, off 3.5%. Earlier in the day, as markets hoped for a cessation of the year-long regime of Fed rate increases, BTC zoomed above $28,700.

"Risk aversion was able to drag down bitcoin as market jitters returned on banking worries and over a quickly weakening economy," Edward Moya, senior market analyst for foreign exchange market maker Oanda, wrote in an email. "The Fed might be done tightening, but the risk of something else breaking in the financial sector remains elevated."

Ether also tumbled from highs over $1,800 to its more recent $1,737. The second-largest crypto in market value was off more than 3.3%. Nearly every other major crypto by market cap in the CoinDesk top 25 was well in the red with the main exceptions APT, the token of layer 1 blockchain Aptos, and LTC, the native crypto of open-source blockchain Litecoin. They rose more than 5% and 6%, respectively. The CoinDesk Market Index, a measure of the crypto market's overall performance, was recently down 2.7%.

The crypto world, meanwhile, suffered its latest shocks with the U.S. Securities and Exchange Commission (SEC) warning crypto exchange Coinbase it was pursuing enforcement action over securities violations and filing a lawsuit against Tron founder Justin Sun on allegations of selling and airdropping unregistered securities, fraud and market manipulation. Tron was recently down 10%.

Oanda's Moya called the allegations against Sun "newsworthy."

"Market manipulation is one part of the crypto world that still has yet to be cleaned up or even close to fully being addressed," he wrote.

Biggest Gainers

There are no gainers in CoinDesk 20 today.

Biggest Losers

Asset Ticker Returns DACS Sector XRP XRP −8.1% Currency Loopring LRC −6.3% Smart Contract Platform Stellar XLM −5.2% Smart Contract Platform

Insights

Everything You Might Want to Know About Conflux’s Blockchain SIM Card

Tokens of Conflux blockchains have been one of the top performers this year, rising 1,700% since Jan. 1 – from 2 cents to over 40 cents – and quickly reaching a market capitalization of over $800 million.

The growth has stemmed mainly from Coinflux’s deep roots in China and a blockchain-enabled SIM (BSIM) card that’s touted as a unique entryway for daily users to interact with cryptocurrency-based applications.

These are set to be built in partnership with China Telecom, the second-largest wireless carrier in China with an estimated 390 million subscribers, as CoinDesk has reported. China Telecom will launch the first BSIM pilot program in Hong Kong later this year, Conflux Network said at the time. This will likely be followed by pilots in key mainland China locations such as Shanghai. The BSIM card will manage and store the user's public and private keys in the card and carry out digital signatures in a way that the private key does not exit the card. Users who switch to a BSIM card will be able to store digital assets safely, transfer their digital assets conveniently and display their assets in a variety of applications. CoinDesk spoke with Ming Wu, Conflux's chief technology officer, to understand more about the BSIM, Conflux’s future plans, how the card is different than a crypto wallet and the disadvantages of using BSIM.

How does the BSIM card work, and how does it differ from a standard sim card?

The BSIM card essentially integrates the hardware crypto wallet functionality into the SIM card. It can manage and store the users’ public and private keys in the card and carry out digital signatures in a way that the private key does not exit the card. The BSIM card can also allow encrypted storage and key retrieval. The BSIM card has more than 10 times the storage capacity and computation power of a traditional SIM card.

How does the BSIM card “lower the barrier to entry” for metaverse applications?

Nowadays, there are a huge number of users of the SIM card. Most of them are users in the traditional world and outside of the Web3 world. They all are potential users who can be converted to Web3 users with the upgrade to the BSIM card. We are developing a mobile app wrapping the access to the BSIM card which will help those users to manage their digital assets based on their traditional habit and without requirement for the knowledge of the crypto keys. This will make it easy for them to take part in the activities in Web3 and the Metaverse. Meanwhile, for the original crypto users, BSIM card makes the access to the hardware wallet much more convenient. It brings a sweet spot of tradeoff between the security and the convenience to the users. So it will also be very attractive to those crypto users.

What are the primary advantages of the BSIM vs. a crypto wallet?

The major advantage of BSIM card is that it provides the security of hardware cold wallet and also the convenience and portability simultaneously. Users may obtain very high security of their wallet simply by equipping their mobile phones with the BSIM card. And this will not break their normal user experiences of the phone.

What are the potential disadvantages of the BSIM?

There will be a small disadvantage for some users who are very concerned about their privacy. In some regions, especially in mainland China, the BSIM card has to be acquired with [know-your-customer], so that your mobile phone number may be associated with your public key account. From another perspective, this may not be a weak point because this makes the way of using such crypto wallets more compliant in China so will get support from the Chinese government more easily. And this also makes it achievable to tie the users’ on-chain information in the virtual world with a bunch of off-chain information in the real world, and unify the metaverse and the real universe.

What are the product development timelines? When do you expect to have a prototype to test in Hong Kong?

We have built prototype chips and tested them on the Conflux network. The feasibility has been verified. We are planning the volume production together with our China Telecom partner. We are expecting to make the production roll-out in Hong Kong this year.

With policy changes, increased support of blockchain technology and Justin Sun moving cryptocurrency exchange Huobi's Asia headquarters from Singapore to Hong Kong, Hong Kong has a very friendly policy to the crypto industry. And it has more and closer connections to mainland China. It has an appropriate role as a bridge connecting the Web3 industry in China to the broader global market.

What will Conflux’s role be within this growth?

Conflux is the only regulatory compliant blockchain in China. It has solid technical design, implementation and maintenance supported by a world-class team with strong technical expertise. So, Conflux will naturally take the leading role to help Hong Kong and mainland China to carry out their expansions in the Web3 area.

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8 p.m. HKT/SGT(12 p.m. UTC): Bank of England interest rate decision.

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

Bitcoin Hovers Around $28K Ahead of Key Fed Decision; SVB Financial Bankruptcy Hearing Latest

Bitcoin continues to trade around $28,000 as crypto investors await the Federal Reserve's announcement about interest rates. Analysts anticipate the U.S. Federal Reserve to raise rates by a quarter-point, according to the CME FedWatch tool. eToro investment analyst Callie Cox and Matrixport head of research and strategy Markus Thielen joined the conversation.

Headlines

Binance Curb on Zero-Fee Trading May Cost Market Share, Boost TrueUSD Stablecoin: Kaiko Research Head: Binance abolished almost all zero-fee trading pairs from its platform after nine months, only keeping the promotion for the TUSD-bitcoin pair.

Short-Term BTC Holders, Stablecoin Supplies Could Indicate Cryptos Future Price Direction: The two data points may show whether bitcoin moves higher or declines further in the aftermath of the U.S. central bank's 25 basis point rate increase Wednesday.

SEC Warns Coinbase It's Pursuing Enforcement Action Over Securities Violations: Coinbase says the Securities and Exchange Commission informed the company of plans to pursue an enforcement action against the exchange and its staking services, but few details were offered.

Tron Founder Justin Sun Sued by U.S. SEC on Securities, Market Manipulation Charges: The regulator alleged TRX and BTT are unregistered securities, and claimed Sun created an "extensive wash trading" program to boost their trading volume.

Rapid Bank Runs Reveal Deposits Are Now Magic Internet Money, Too: Federal Reserve Chair Jerome Powell says the speed of the Silicon Valley Bank run was “very different from what we’ve seen in the past.” It’s hard not to draw comparisons to the rapid withdrawals in crypto in 2022.