Banks Hold Crypto, Mastercard Announces New Crypto Partnership

Spencer Platt/Getty ImagesA new Bitcoin-linked fund debuted on the New York Stock Exchange Tuesday morning, bringing crypto one step closer to conventional investment accounts.Editorial IndependenceWe want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.

The chairwoman of the Federal Deposit Insurance Corporation said U.S. officials are looking to provide guidance on how banks and their clients can hold cryptocurrencies, according to reporting by Reuters. The statement comes ahead of a much-anticipated and delayed report on stablecoin regulation from the Federal Reserve, which Federal Reserve Chairman Jerome Powell previously said would come out in early September. It’s unclear when the report will be released. 

Bitcoin reached a new record high last week following the launch of the first Bitcoin ETF available to U.S. investors on Tuesday. The crypto went over $66,000, the highest price Bitcoin has ever reached. On the heels of Bitcoin’s high, Ethereum also posted a 5-month high. 

In other cryptocurrency news, Mastercard has a new partnership to expand its cryptocurrency offerings for banks, merchants, and financial technology companies in the U.S. 

Here’s a rundown of the latest big crypto news:

• Jelena McWilliams, the chairwoman of the Federal Deposit Insurance Corporation (FDIC) told Reuters that top U.S. officials are looking for clearer ways banks and their clients can hold cryptocurrency. “If we don’t bring this activity inside the banks, it is going to develop outside of the banks. … The federal regulators won’t be able to regulate it,” McWilliams told Reuters. 
• Bitcoin reached a record high of $66,974 last week. The new all-time high follows the debut of the first Bitcoin-linked ETF on the New York Stock Exchange Tuesday morning. Bitcoin’s previous high-point was $64,888 in mid-April. 
• Cryptocurrency made its debut on the New York Stock Exchange last week in the form of a Bitcoin-linked ETF. The fund trades under the ticker BITO, and is the first investment product approved by the SEC linked to crypto assets. But the fund doesn’t directly hold Bitcoin — just Bitcoin futures contracts. This is an important distinction and investors should be aware before they buy in. 
• Ethereum hit a 5-month high around $4,200 last week, the highest it’s been since May when it posted its all-time record high of $4,379. The cryptocurrency has relatively maintained this heightened level and hovered around $4,100 Monday morning. 
• Mastercard announced it will partner with Bakkt to offer a “broad set of cryptocurrency solutions and services” for merchants, banks, and financial technology firms in the U.S. “Consumers, in turn, will experience expanded access to the digital asset ecosystem,” according to a press release. 

Bitcoin is the largest cryptocurrency by market cap, and a good indicator of the crypto market in general, since other coins like Ethereum (and smaller altcoins) tend to follow its trends. Even though Bitcoin recently set a new all-time high, it was a pretty normal uptick for the crypto, which has also seen a more than 50% decrease in value in past months. That’s not to say investors should take swings in either direction lightly, and this is also why investing experts recommend not making any major investment changes based on these normal fluctuations.

Cryptocurrency is still very new, and everything from innovation to regulation can have outsize impact for investors. Here’s how you can invest smartly, regardless of what’s making news or Bitcoin’s price swings.

What You Should Know About Crypto Investing

How Investors Should Deal With Volatility

Cryptocurrency volatility is nothing new, and you should be comfortable with this if you decide to invest. 

Volatility can be attributed to an “immature market,” says Ollie Leech, learn editor at Coindesk, a cryptocurrency news outlet. Anything from a celebrity tweet to new federal regulation can send prices spiraling. 

“If Elon Musk puts hashtag Bitcoin in his Twitter bio, it sends Bitcoin up 10%,” says Leech. 

This unpredictability is part of the reason why investing experts warn against investing huge amounts of your portfolio into a risky asset like crypto. Many recommend keeping your crypto holdings to less than 5% of your total portfolio. 

For new investors, day-to-day swings can seem frightening. But if you’ve invested with a buy-and-hold strategy, dips are nothing to panic about, says Humphrey Yang the personal finance expert behind Humphrey Talks. Yang recommends a simple solution: don’t look at your investment. 

“Don’t check on it. That’s the best thing you can do. If you let your emotions get too much into it then you might sell at the wrong time, make the wrong decision,” says Yang.

This is the traditional “set it and forget it” advice that many traditional long-term investors follow. If you can’t get on board, and the extreme dips continue to cause you worry, then you might have too much riding on your cryptocurrency investments. 

“The most important thing any investor can do, whether they are investing in Bitcoin or stocks, is not just to have a plan in place, but to also have a plan they can stick with,” says Douglas Boneparth, a CFP and the president of Bone Fide Wealth. “While buying the dip might be attractive, especially with an asset that you really like, it might not always be the best idea at the moment.”

Other Recent Crypto News

• Coinbase announced last week it is partnering with Facebook to pilot a new digital wallet, named Novi. The wallet will enable individuals to send and receive money abroad “instantly, securely, and with no fees,” according to a Coinbase blog post. The popular cryptocurrency exchange has also partnered with the NBA for a sponsorship deal, marking another major partnership for the platform.
• Popular cryptocurrency exchange Coinbase announced it will be creating Coinbase NFT, a “peer-to-peer marketplace for minting, purchasing, showcasing, and discovering NFTs.” The announcement comes after an SEC scuffle over another Coinbase product, Coinbase Earn, last month. 
• U.S. Federal Reserve Chairman Jerome Powell spoke at the House Financial Services Committee meeting recently and clarified comments from a July hearing where he expressed interest in cryptocurrency regulation. Powell says he has “no intention” of banning cryptocurrencies.
• Vitalik Buterin, the creator of popular cryptocurrency Ethereum, was named to the TIME 100 list of the most influential people of 2021. Alexis Ohanian, former executive chairman of Reddit, wrote of Buterin: “What makes Vitalik so special, though, is that he is a builder’s builder. No one person could’ve possibly come up with all of the uses for Ethereum, but it did take one person’s idea to get it started. From there, a new world has opened up, and given rise to new ways of leveraging blockchain technology.

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