The cryptocurrency market has experienced a period of subdued prices, with a notable mid-week surge bringing Bitcoin to $26,770 and Ethereum above $1,600 at the time of writing. The total crypto market capitalization has reclaimed $1.11 trillion.
Concurrently, the US 10-year Treasury yield has climbed to 4.509%, reflecting a significant shift in investor sentiment. This upward trend continued, with yields reaching 4.55% on Tuesday, up from 4.18% at the beginning of the month, marking a 16-year high. These rising interest rates have exerted pressure not only on cryptocurrencies but also on equity markets, with the S&P 500 hitting its lowest point since early June and the Nasdaq reaching a nearly four-month low.
JPMorgan Chase CEO Jamie Dimon commented on the situation, stating, "I am not sure if the world is prepared for 7%," noting that while the jump from 0%-2% to the current 5.25%-5.50% Federal Funds rate was significant, few market participants are pricing in the possibility of 7% inflation. He warned that this could mean "stress on the system" and potentially lead the US economy into a recession.
In a related move, JPMorgan's UK bank announced a ban on cryptocurrency payments via debit cards or bank transfers for its British clients starting October 16th. The bank stated it would decline any payments it identifies as related to crypto assets, citing a rise in crypto-related scams targeting UK customers. Customers remain free to use other banks or providers for crypto investments.
This banking restriction follows recent discussions facilitated by the UK's Financial Conduct Authority (FCA) between banks and crypto companies, as traditional lenders have shown increasing reluctance to service the crypto industry.
This represents another setback for the crypto market, which is already grappling with heightened regulatory scrutiny following the collapses of FTX and Terra in 2022, even as prices attempt a recovery. Beyond rising Treasury yields, other macroeconomic headwinds including stagflation risks and a strengthening US Dollar Index continue to create challenges for risk assets like cryptocurrencies.
The lingering threat of a US government shutdown adds another layer of uncertainty, as the House of Representatives appears unlikely to reach a timely agreement to maintain federal operations. Such an event could impact crypto by delaying approvals for companies like Bakkt, as happened during the 2018-2019 shutdown, and potentially postponing decisions on Bitcoin ETF applications.
We have already seen the Securities and Exchange Commission (SEC) delay applications for spot-based Bitcoin Exchange-Traded Funds (ETFs). A government shutdown could mean even longer waits for final decisions on these products.
Just this week, even before a potential shutdown, the SEC extended the decision deadlines for two Bitcoin ETF applications from Global X and Ark 21Shares. Ark Investment Management, which has been seeking ETF approval since 2021, now has until November 21st to respond to the SEC, while Global X, which applied just last month, has until October 21st.
On the same day, bipartisan members of the House Financial Services Committee sent a letter to SEC Chair Gary Gensler, urging prompt action following the agency's court loss in the Grayscale case. Gensler is scheduled to appear before the committee for an oversight hearing.
The approval of spot Bitcoin ETFs represents a significant potential development for crypto. Brokerage firm Bernstein highlighted this in a research note this week, estimating that crypto fund management could grow to $650 billion in assets within five years of a spot Bitcoin ETF launch, with the US market expected to bring substantial capital. Analysts led by Gautam Chhugani noted that the current "cottage industry" manages approximately $50 billion in assets, about 4% of the current crypto market size.
Multiple institutions, including asset management giant BlackRock, have applied for spot Bitcoin ETFs with the SEC. Earlier this month, the regulator delayed decisions on all these applications until October.
According to Bernstein's report, demand is expected to be driven by "investment advisors, wealth and private bank wrap products, and easier access to ETFs in direct brokerage accounts." The firm projects Bitcoin and Ethereum could capture 10% of ETF market share and 5-6% of crypto hedge fund份额. The report added: "Crypto finance adoption follows hype cycles, and we expect a hockey-stick adoption in 2024 to be a landmark regulatory year for ETF approvals."
WLD Price Shows Recent Upward Momentum
While anticipation for spot Bitcoin ETFs has kept trader and investor attention focused on leading cryptocurrencies, Ethereum has been experiencing reduced revenue and a new inflationary token economy. However, a major upgrade scheduled for later this year will introduce "proto-danksharding" to the blockchain, aimed at reducing gas fees and increasing transaction throughput.
Among altcoins, Maker, Tron, and Bitcoin Cash have performed well. The WLD token has also remained in positive territory over the past two weeks. According to CoinGecko, the token has risen 72.3% during this period after hitting an all-time low of $0.973.
With a market capitalization of approximately $229 million, WLD currently ranks 131st in the crypto market. At the time of writing, WLD is trading at $1.74, up 3.8% in the past 24 hours with a trading volume of $70.5 million. Despite the upward move, its trading activity shows volatility, with volume down 32.5% from the previous day.
WLD's weekly price performance shows a 21% increase, while monthly gains stand at 43%. However, the token remains down 47% from its peak of $3.30 just two months after its launch.
WLD is the native token of the digital identity platform Worldcoin. During its testing phase, WLD was distributed to participating users. The total WLD token supply is 10 billion, to be released over 15 years. Currently, only 131 million WLD tokens are in circulation. At launch, 100 million tokens were provided to market makers to facilitate trading activity.
Worldcoin is developed by Tools for Humanity and co-founded by Sam Altman, founder of ChatGPT parent company OpenAI. The San Francisco-based company aims to provide "global proof of personhood" to verify human identity and distinguish real people from bots and AI algorithms.
The Worldcoin ecosystem consists of World ID and the World App. World ID allows users to verify their identity online using an iris-scanning device called the Orb, which scans a person's iris to generate a unique identifying code called an IrisCode. This then issues users a unique World ID that is added to the Worldcoin blockchain.
Within a week of launch, Worldcoin Orbs were deployed in Tokyo, Singapore, Hong Kong, Seoul, Paris, Lisbon, and many other cities worldwide. However, Worldcoin services are currently unavailable in the US and other restricted jurisdictions.
Users obtain their World ID through the World App, which initially operated on the Polygon blockchain during testing but later migrated to Optimism as part of the Optimism Superchain.
Last week, Worldcoin announced that due to World App wallet upgrades, it was significantly reducing Optimism's workload, making operations more scalable and cost-effective without Worldcoin's input. This update enabled the project to cut fee expenditures and reduce Optimism's load by two-thirds. Before the update, Worldcoin's transaction costs were split between Ethereum (90%) and Optimism (10%).
Following these developments, World App achieved record single-day transaction volume, and development activity (measured by commits to public GitHub repositories) increased from 1.19 to 1.85.
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Worldcoin Adoption Grows Amid Increased Scrutiny
WLD's recent price action comes as the biometric wallet and ID project reported this week that it has signed up over 1% of Chile's population (approximately 195,000 people) since its launch.
According to the crypto project, more than 200,000 Chilean users are now using Worldcoin to obtain free WLD tokens. Similar adoption trends have emerged elsewhere in South America, including Argentina, which reported over 9,500 people verifying their IDs in a single day last month despite having only four verification stations in the country.
Worldcoin has received significant attention across South American countries, prompting Tools For Humanity to expand operations in Chile with additional verification stations in Viña del Mar and Concepción beyond the capital Santiago.
Since the project launched in July of this year, people have been registering for World ID to receive "free" WLD coins. The official website reports that over 2.3 million people have undergone eye scans to date.
Data from a Kenyan parliamentary committee investigating the project showed that 350,000 Kenyans had registered as of August, representing 25% of the platform's users at that time. However, the project has faced obstacles in the African nation, where the government suspended Worldcoin activities in August to assess potential risks to public safety. The Communications Authority of Kenya and the Office of the Data Protection Commissioner stated that their preliminary review raised concerns about obtaining consumer consent in exchange for monetary incentives that border on inducement (i.e., WLD coins).
Kenyan law enforcement officials raided Worldcoin offices and seized records and machines, which were taken to Kenyan Criminal Investigation Department headquarters for analysis. Tools for Humanity was accused of not disclosing its true intentions during registrations in Kenya.
The Kenyan government also sought to arrest Tools For Humanity CEO and co-founder Alex Blania and Tools for Humanity legal spokesperson Thomas Scott when they appeared before a Kenyan National Assembly hearing, but US authorities intervened.
Beyond Kenya, various regulatory actions have been taken in Argentina, France, Nigeria, the UK, and Germany amid concerns about the collection of biometric data, how it will be used, and who will have access to it.
In recent weeks, French data regulators conducted "checks" at the company's Paris offices after opening an investigation into Worldcoin in July, questioning the legality of its biometric data collection.
In Argentina, data regulator AAIP launched an investigation into how Worldcoin collects, stores, and uses personal data. In a letter last month, AAIP questioned Worldcoin about the project and the "legal basis for processing personal data."
Germany's data regulatory authority has also been investigating the project since late last year over concerns about the mass processing of sensitive biometric data. Financial regulator BaFin is another agency examining the digital currency.
In the UK, the data regulator announced in July that it would examine Worldcoin. Portugal's data regulator CNPD has inspected Worldcoin's local data collection operations and has been in contact with Bavaria's data protection authority in Germany.
In response, the Worldcoin Foundation, based in the Cayman Islands, stated in an interview that it aims to protect individual privacy and is committed to complying with regulatory requirements. "The Worldcoin team welcomes any opportunity to answer questions about the project's purpose and technology," a representative said at the time.
Frequently Asked Questions
What is Worldcoin's main purpose?
Worldcoin aims to create a global identity and financial network that distinguishes humans from AI online. Its World ID system uses biometric iris scanning through Orb devices to provide proof of personhood, while its WLD token facilitates transactions within its ecosystem.
How does Worldcoin verify identity?
Worldcoin uses specialized hardware called Orbs to scan users' irises. The device creates a unique IrisCode while reportedly deleting the original scan. This code generates a zero-knowledge proof that verifies uniqueness without revealing biometric data.
Why is Worldcoin facing regulatory scrutiny?
Regulators worldwide have raised concerns about Worldcoin's collection and storage of sensitive biometric data. Questions remain about how this data is protected, who can access it, and whether proper informed consent is obtained, especially in developing regions where financial incentives might influence participation.
What determines WLD token value?
WLD's value is influenced by adoption rates of World ID, trading activity on exchanges, overall crypto market trends, and regulatory developments. As more users verify through Orbs and receive tokens, circulating supply increases while demand dynamics determine price action.
Where is Worldcoin available?
Worldcoin verification is currently available in multiple countries across Europe, South America, and Asia, but remains unavailable in the US and several other jurisdictions due to regulatory considerations. The project continues to expand its Orb verification locations globally.
Can I buy WLD without iris scanning?
Yes, WLD tokens are available on major cryptocurrency exchanges regardless of whether users have undergone Worldcoin's verification process. However, only those who complete iris scanning receive initial token grants from the project.
Concluding Thoughts
Given Worldcoin's growing global adoption, its token stands to benefit from increased usage. However, the regulatory scrutiny surrounding Worldcoin cannot be overlooked. How Worldcoin addresses these concerns will significantly impact its adoption trajectory. For now, the crypto market remains focused on spot Bitcoin ETFs, whose eventual approval is expected to open the floodgates for institutional capital.