First Mover: Bitcoin Pause, Ethereum Snafu, 1,000% Returns Put Focus on Exchange Tokens

Bitcoin was higher, pushing toward the upper edge of its recent range between about $14,700 and $15,600.

“The positive sentiment towards bitcoin has not gone away,” said Denis Vinokourov, head of research at crypto prime broker Bequant.

In traditional markets, Asian shares tumbled, led by Alibaba and Tencent, as Chinese government issues regulations designed to curb growing influence of big tech companies. European shares were up, and U.S. stock futures pointed to a higher open. Gold weakened 0.1% to $1,875 an ounce.

Market Moves

Crypto-exchange tokens like Binance Coin (BNB) and FTX’s FTX (FTT) started out as a sort of in-house currency: Traders could use them within the closed environment to buy digital assets, getting discounts on transaction fees.

But recently some digital-asset traders are thinking of them a bit more like traditional stocks – as a bet on the exchange itself. It’s also increasingly possible to park the tokens in various systems and protocols for yield, not too dissimilar from a dividend.

And some of them are registering outsize gains. Binance’s BNB tokens have gained about 30% this year, while FTX token is up 157% and upstart Hxro’s token has increased 10-fold in price.

Exchange management teams increasingly viewing the tokens as a way to bind loyalty among customers. The rationale, according to Jack Purdy, senior research analyst at the cryptocurrency research firm Messari, could be that the exchanges now view token holders as an important component to their long-term business success.

The specter of an unexpected move by authorities to crack down on the tokens – precisely because of their resemblance to stocks – remains a threat.

Exchange tokens “are a gray area with equity-like characteristics,” Purdy said. “Regulatory concerns are definitely a problem because they definitely look like securities under U.S. laws.”

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