🚨 How the US plans to regulate crypto: top crypto news analysis.

GM!

Vanessa from the best crypto community to ever do it — buidlbee! Here to bring you all the important details you might have missed from the crypto market yesterday, in a readable, digestible, and entertaining letter.

Here's the tea...

• The White House called, and we answered 😎

• Optimism is making a positive run on the charts 📈

• Luna might be the comeback of the year, and this is why 🔥

The government has been making efforts to regulate the cryptocurrency industry for a hot minute now. While some officials are hoping for a ban, others are looking for ways to protect investors. The latter is what the U.S. government supposedly seeks to do, and we have all the details from their most recent blog.

In 2022, President Joe Biden, in an announcement, made his intentions to investigate the risks of the crypto market. The administration was also to explore new innovations and work on creating a crypto-version of the dollar. By September, it released the first framework for crypto regulation in the US.

Fast forward to 2023, on January 27, the administration released a roadmap to this effect. We had tokenomics expert, Eloisa Marchesoni, and policy lead at Tron DAO, Andrew Hemingway, break it down as layman as possible:

• The government seeks to control how exchanges use users' assets ✅

• Oblige crypto companies to disclose information about themselves ✅

• Increase penalties for financial crimes ✅

• Prohibit crypto intermediaries from passing information to criminals ✅

• Increase funding for law enforcement ✅

• Control the risks of stablecoins ✅

With all the scandals we had to deal with last year, it's no surprise the government would like to take precautionary measures on the industry. Furthermore, there is a gap in the current financial system that can be closed through blockchain and crypto. While the major sentiments of government regulation in the long term, remain bullish, some investors aren't really buying the idea. What do you think, friend? Let me know your thoughts by dropping a comment on our article.

The Layer-2 Ethereum-based project, Optimism, is a newbie that seems to be setting trends, not following them. Launched in the second half of 2022, the OP token seems to be surging more than ever, as it hit a record high of $3 on February 3.

A day before that, the BUSD devs announced its deployment on the Optimism network. That, and a new update on the protocol, proposed on February 2, could be the cause of the sudden bull run. Voting begins on the 16th. The Bedrock update is expected to:

• Reduce fees and deposit times by implementing an optimized data compression strategy to minimize costs ✅

• Improve node performance ✅

• Make the Ethereum-like blockchain even more equal to Ethereum by adding L1 features like support for EIP-1559 ✅

Following the two announcements, OP shot up by 22.6%. 30-day growth is over 192%. OP currently trades at $2.95, with a market cap of ~$691M. There are 234,748,364 tokens in circulation, with a total supply of 4,294,967,296. Optimism was ranked 13th in the number of daily active users, and 4th in the number of contract creators, and according to Defi Llama, it's the second Ethereum L2 chain with ~$770 million locked in its smart contracts, coming second only to Arbitrum.

So, friend, if the Bedrock update is passed by March 1, it could boost the token even more! 🚀

In my letter to you yesterday, I spoke about how LUNA is gearing up to be the biggest comeback in crypto history [P.S. This is your sign to read my last letter]. The Luna Army is working tirelessly to make sure their beloved token achieves that feat, but as we all know, all talk and no action is futile in this industry.

So, here are five possible real-life growth scenarios for the altcoin:

1. A strong community — We already know Luna has it in the bag with this one. The stronger a coin's community, the more popular it gets, and therefore, the more investments are likely to enter the ecosystem.

2. Retying of LUNC to USTC stablecoin — Binance recently took off its warning signal on USTC, and users began voting for a re-peg to the native token, LUNC. Although this caused an increase in value for LUNC, we can't exactly say how the possible retie will affect its value long term.

3. Exchange listings — LUNC is currently on Binance, but cannot be used on Binance US. Likewise, Coinbase suspended trading on the exchange on May 27 but will release a list of newly-listed assets soon. If LUNC gets relisted on Binance US and Coinbase, the token could be up by 41% and 91% respectively.

4. Burning — After the crash of Terra, developers burned 50% of the circulating supply to halt the declining value. If more tokens are burned, it could continue positively affecting the altcoin. Moreover, aggressive burning in January made LUNC one of the best-performing coins on the market.

5. Overall economic outlook — The decline in the inflation rate announced at the start of the year caused LUNC to rise by 25.8% from $0.0001534 to $0.0001931, and the Fed rate announcement caused another 20.04% rise from $0.0001652 to $0.0002066.

So, friend, what do you think? 😏

That's a wrap on the trending news and analyses today. Don't be shy, share this with friends, and I'll see you tomorrow with more tips to help you make it with crypto 💪