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The International Monetary Fund’s Chief Economist Believes Cryptocurrency Should Be Regulated and Not Banned

By
Adam Barry
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Gita Gopinath, the chief economist at International Monetary Fund (IMF), has said that countries should regulate cryptocurrency instead of banning it. Moreover, Gopinath has asked for standard global policies to control digital assets as they create difficulty for upcoming markets.

Gopinath says the ban will not be effective

Gopinath was speaking at a National Council of Applied Economic Research (NCAER) event, where she explained that cryptocurrency has a few benefits like decentralized technology. For this reason, it was essential to regulate the sector instead of banning it.

The executive added that crypto assets could be vital for developing and emerging economies. Moreover, since most exchanges are offshore, people still trade them despite a ban. Gopinath believes that cryptocurrency is too complex for a single country to regulate on its own hence the need for global cooperation.

Gopinath stated that countries would have to overhaul most existing transactions laws because of cryptocurrency. On January 21, 2022, Gopinath will become the IMF’s First Deputy Managing Director.

The IMF has proposed a framework to regulate cryptocurrency

Gopinath’s call to action follows the IMF’s recent guidelines for a framework that would make controlling the crypto space standard. The IMF believes that global regulations should give all parties a level playing field.

The IMF has suggested that countries make regulations according to the use of cryptocurrency and stablecoins. For example, securities regulators should deal with products and services for investment the same way they deal with securities dealers and brokers.

The IMF also believes that the payments authority oversight or the central bank should deal with products and services for payments as they would banks deposits.

It also states that crypto assets could change the financial and internal monetary system drastically. The IMF’s suggestion ensures innovation in the crypto space while protecting investors.

The regulator has approached the growth of cryptocurrency skeptically and pointed out that the industry presents a threat to international financial stability. Moreover, the IMF believes the relevant authorities should protect crypto investors.

The IMF warned other countries not to legalize Bitcoin like El Salvador. This warning comes as other countries in South America consider making digital currency a legal tender.

The Bank of England Warns That Bitcoin Could Become Worthless

By
Adam Barry
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0

The Bank of England has issued a warning that Bitcoin could become worthless. It has also said that crypto investors should be ready to lose everything they put into the space.

Thomas Belsham from the media engagement and stakeholder division of the Bank of England published a blog that suggested that Bitcoin doesn’t meet the standard of a currency. The staff member also pointed out that it is highly volatile.

According to Belsham, the exchange might only create 21 million Bitcoin. This move intentionally creates a scarcity that makes investors refer to it as digital gold. However, Belsham states that this scarcity might make digital currency useless.

Thomas Belsham believes sustaining the system is difficult

Miners add Bitcoin coins by authenticating modifications in their blockchain record. The number is currently 19 million. Even though miners are unlikely to achieve the final number of Bitcoins in circulation before February 2140, Belsham believes maintaining the system will be more challenging with time.

The value of Bitcoin has increased by $67,000 this year. Despite this, the Bank of England does not believe digital currency has intrinsic value. The central bank has even cautioned investors of the risks.

Sir Jon Cunliffe, the deputy governor of the Bank of England, has warned that crypto’s accelerating expansion threatens the country’s financial system. He points out that the volatility of the digital currency is an issue.

Moreover, if the value were to drop suddenly, institutions would have to dampen the impact. For this reason, Cunliffe suggests introducing regulations that would lower the risks.

Inflation has caused investors to turn to Bitcoin

Furthermore, inflation in the U.K has reached the highest in ten years. The Consumer Price Index, 4.2% in October, rose to 5.1% in November. This figure is double what the central bank foretold.

The country’s inflation rate has made investors consider crypto and other assets to protect themselves from inflation.

The Bank of England had predicted that inflation would be 5% in the spring of 2022. It later lowered it to 2% by the end of 2023. Other Economic Forecasters had expected that the inflation rate would be 4.7% in November.

The Monetary Policy Committee will decide if they should tighten money policies as the labor market stays strong and inflation increases.

The Dubai Government and Binance Sign a Memorandum of Understanding (MoU) for Crypto Activities

By
Adam Barry
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0

Binance and the Dubai government have signed a Memorandum of Understanding (MoU) on crypto activities. Although no outside party knows the detail of their discussions, experts suggest that Dubai would be an ideal location for Binance to open its global headquarters because Changpeng Zhao, the CEO of Binance, bought a home there in October.

Zhao stated that the city is supportive of crypto-related activities. He added that he bought a house in Dubai because of the exchange’s dedication to the region. France and Singapore have also been up for consideration when choosing headquarter for Binance. However, the recent agreement shows that the exchange might have settled on the UAE.

Dubai has shown support for crypto

As the value of the crypto industry surges, many countries have not supported it. Like many exchanges, Binance has faced scrutiny, with countries such as China altogether banning crypto activities.

Binance is trying to repair its relationship with many countries. However, others, such as Dubai and the U.K, have been open to the industry. For this reason, the company has found it easy to invest in them.

Reports indicate that Dubai’s police partnered with BitOasis, a local firm, in October to reach people to trade digital assets safely due to an increasing number of fraud cases. This decision contrasts with other countries where governments have opposed crypto instead of supporting it and ensuring investors are safe.

Mubadala Investment Company will invest in crypto

Khaldoon Al Mubarak, the Managing Director and CEO of Mubadala Investment Company, has shown interest in the crypto space. Mineral has said that the investment fund will be venturing into crypto. However, he has not given specific details on how it intends to do this.

As part of the agreement with The Dubai World Trade Center Authority (DWTCA), Binance will assist the authority in creating a hub for global virtual assets. Moreover, it will support the city’s dedication to building a global virtual asset ecosystem for sustained digital innovation and economic growth.

Binance plans to help businesses and crypto exchanges that offer distributed ledger technology services and blockchain. The exchange believes that Dubai’s goal will accelerate the growth of the world’s economy.

HSBC Holdings (NYSE: HSBC) and Wells Fargo & Co (NYSE: WFC) Will Use Blockchain Technology to Settle Matched Foreign Exchange Transactions

By
Adam Barry
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0

HSBC Holdings (NYSE: HSBC) and Wells Fargo & Co (NYSE: WFC) plan to use blockchain technology to settle matched foreign exchange transactions. The parties stated they would use the solution, which uses a shared settlement ledger to process Euro transactions, the British pound sterling, the Canadian dollar, and the U.S dollar.

Details of the product

The bank will add more currencies in the future as they introduce a central Financial Market Infrastructure (FMI) provider for administering the rulebook of the platform. Wells Fargo and HSBC have said that their product will use advantages from blockchain technology like real-time transparency.

The product will also have Payment vs. Payment settlements to lower processing costs and settlements risks if building on the current HSBC’s FX Everywhere platform, which the company launched in 2018.

The banks have also explained that users will be capable of settling bilateral cross-border transactions in various offshore and onshore currencies on the platform. The bank also points out that this solution reduces risks and increases flexibility.

According to HSBC’s global head at FX, Mark Williamson, financial services keep digitizing value on the blockchain and the store of payment. For this reason, the bank is excited to work with Wells Fargo to adopt a digital backbone to confirm and settle foreign exchange trades.

As per the agreements, Wells Fargo will provide liquidity and reach in the Americas. The banks will also take advantage of HSBC’s dominance in Asia and Europe. This product showed the first attempt to settle cross-border payments with blockchain technology.

Other banks in the U.S are using blockchain technology 

Wells Fargo is not the first bank in the U.S to join blockchain technology. Goldman Sachs Group Inc (NYSE: GS), for example, is trying to incorporate blockchain technology with its usual banking practices. Moreover, JPMorgan Chase & Co. (NYSE: JPM) had made plans to hire software engineers to build a Collateral Blockchain Tokenization System. The bank will also ask the software engineers to oversee its Onyx division. This division is the bank’s wholesale payment token, JPM.

The move by Wells Fargo and HSBC shows how blockchain technology is slowly entering the foreign currency market, which is worth $6.6 trillion a day. The Central banks in France and Switzerland have also tested a cross-border blockchain payment as their digital currency-related projects.

Swissquote Group Holding (OTCMKTS: SWQGF) Plans to Create a Digital Currency Trading Platform

By
Adam Barry
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0

Swissquote Group Holding (OTCMKTS: SWQGF), Switzerland’s most prominent online bank, will create a digital currency trading platform in 2022. Jan De Schepper, the bank’s sales manager, has confirmed the bank’s plans.

In addition, the bank hopes to become a leading provider of digital assets in the country. The bank will expand its cryptocurrency services to include staking services and stablecoins, which have seen a surge in popularity in the crypto space.

According to the CEO and Founder of Swissquote, Marc Buerki, traditional banks are starting to panic as cryptocurrency grows. Buerki added that banks beginning to offer crypto services are later entries.

The move could increase digital trading platforms in Switzerland 

Experts believe that the launch of Swissquote’s digital currency asset trading platform will cause an increase in trading platforms in the country. For example, the Swiss Stock Exchange SIX had added SDX, an operational licensed digital exchange. This move followed the launch of SMEIX by Berner Kantonalbank, which trades tokenized small caps.

Moreover, Sygnum had received approval from regulators to create a trading system in September 2020. Increased demand for digital tokens and coins since last spring has caused Swissquote to hire new workers. The company will keep hiring new people to accelerate development.

 The bank hired new people to keep you with the demand for crypto services

De Schepper points out that the stopping rush almost overrun the bank’s customer service, thus the need to recruit more people. Fortunately, the new hires allowed the bank to cut the waiting times of clients who call into its offices. However, there are circumstances when opening an account could take nearly a week, especially if the bank needs extra clarification.

The cryptocurrency industry has seen a surge in revenue over the last few years. For instance, income from investments increased by over 1000% to $68.3 million in the first six months of 2021.  Moreover, the bank expects to double its pre-tax earning by the end of the year. It also hopes its spending will surge due to its high investments in infrastructure.

At this time, Swissquote supports 24 cryptocurrencies, including Solana, bitcoin, Polkadot, ethereum, dogecoin, litecoin, year.finance, XRP, compound, bitcoin cash, maker, chain link, filecoin, ethereum classic, algorand, EOS, cosmos, stellar, have, tezos, uniswap, augur, card and, and ox.

Mubadala Investment Company Will Join the Cryptocurrency Space

By
Adam Barry
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0

Khaldoon Al Mubarak, the Managing Director and CEO of Mubadala Investment Company, has stated that the company might join the crypto space. Mubarak has said he has no reservations about crypto.

Mubadala wants to focus on crypto technologies

Mubarak points out that crypto was worth $200 billion in 2019 and will be $2.5 trillion in 2021. In addition, the industry continues to grow. For this reason, the CEO from the UAE is not a skeptic. He states that Mubadala plans to change the asset class into something different.

Mubadala is one of the most significant wealth funds globally, with $243 billion in assets under its management. Mubarak confirmed that the company is now investing in the crypto space. Although Mubadala has invested in blockchain technology and energy use, he did not give specific information. He also did not state the funds the company plans to invest and instead focused on the infrastructure.

Regulators do not share Mubarak’s enthusiasm for crypto

Mubarak uses the rise in the crypto market to state that the industry will grow. Most regulators do not share his optimism as they worry that crypto could negatively impact the financial system if relevant authorities do not monitor it properly.

For years, regulators showed no interest in cryptocurrency as the industry steadily grew. However, with its acceleration since the pandemic, many are trying to assess the risk that it poses to financial and consumer markets.

Stablecoin, which connects the crypto and traditional economy, is an even more significant cause for concern. Regulators believe that these coins don’t offer stability and harm the economy. For this reason, they need to come up with a framework that will protect consumers and traditional currency.

Mubadala in Abu Dhabi manages investments and assets in the UAE and globally. The investors operate in over 50 countries worldwide. It has operations in San Francisco, New York, Beijing, Moscow, Rio de Janeiro, and London. The government of Abu Dhabi owns the company.

The Mubadala Development Company and the International Petroleum Investment Company (IPIC) created Mubadala Investment Company. It has clients in different sectors such as financial, healthcare, industry, real estate, aerospace, technology, and the energy and utilities sector.

Binance Might Partner With Indonesia’s Wealthiest Family

By
Adam Barry
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0

A source has stated that Binance could open a cryptocurrency exchange in Indonesia with the Hartonos, the country’s wealthiest family. The Hartonos operate PT Bank Central Asia (BCA), one of Indonesia’s biggest banks.

Michael and Budi Hartono, who are brothers, are the owners of BCA. The brothers are also cigarette manufacturers. They also own e-commerce businesses and telecommunications services. Binance would allow the brothers to join the digital currency space in a way that guarantees growth.

The partnership could help Binance reach more people in Indonesia

The source states that PT Telkom Indonesia is involved in the agreement. If the deal goes through, it could increase Binance’s reach in Indonesia with unbanked people. A large section of the country’s population has no access to formal finance or banking. PT Telkom has currently been trying to find partners in the crypto sector.

According to Ahmad Reza, PT Telkom’s Senior Vice President, the company’s connectivity business could complement crypto exchanges to reach Indonesia’s more than 270 million population.

While many speculate that the bank will use an affiliate to partner with Binance, a representative for BCS has stated that they have not discussed the partnership in any board meeting.

Binance is the crypto exchange with the most significant trading volume globally. While it has users in Indonesia, it has still not captured a more considerable market share. Experts believe that the government’s support of crypto and  Indonesia’s massive population could benefit Binance.

Other Southeast Asian financial institutions are trying to join the crypto space

Many financial institutions in Southeast Asia are trying to venture into the crypto market. One such firm is DBS Holdings Ltd. DBS Digital Exchange, the institution’s financial arm offers crypto trading and security token services.

Binance has made other moves to increase its reach in Indonesia. For example, the exchange purchased a stake in Tokocrypto, the largest exchange in the country. The crypto-friendly regulations in Indonesia could make the exchange a significant player in the country and cement its place in the global crypto market.

Binance also has a share in other markets. For instance, the company’s division in Australia is the first exchange for embarking on ESG reportage. Moreover, France has asked the firm to comply with AML before starting operations.

The International Monetary Fund Suggests a Global Approach to Cryptocurrency Regulation

By
Adam Barry
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0

The International Monetary Fund (IMF) has proposed a framework to make the regulatory approach towards cryptocurrency functional globally.

The IMF has stated that global regulations will level the playing field for everyone. The framework requires providers of crypto asset services to obtain licenses from the relevant agencies.

Regulation could be based on the use of the currency

Moreover, they would align with the primary use of the currency and stablecoin. For instance, the regulator has suggested that products and services towards investments should have the same guidelines as securities brokers and dealers that securities regulators oversee. Products and services for payments, on the other hand, will have policies like those of bank deposits that the payments oversight authority or the central bank oversees.

The IMF has also asked relevant authorities to give guidelines for regulated financial institutions and their involvement with digital currency. Such regulations would require banks that offer custody services to state risks associated with the practice.

Countries are trying to regulate crypto differently

The IMF believes that there needs to be a uniform framework for crypto. For this reason, there should be worldwide collaboration to address challenges that come out of the crypto space. In addition, the IMF says that a lack of coordination could destabilize cash flow around the globe.

According to the IMF, countries are taking varying approaches to regulating crypto. Furthermore, current laws do not always allow you tried to make decisions that cover all aspects of the currency. Despite the agency’s warning, it notes that coming up with global regulations could be difficult. However, all parties involved should develop a framework while the crypto sector grows. In addition, regulators should put laws that allow cryptocurrency to maintain innovation.

The crypto industry has undergone tremendous growth in the last few years, so many countries are trying to evaluate the risks that it poses to financial stability. The IMF believes that these risks could become systemic in many countries.

One of the biggest problems with crypto is determining the valuation. Others include regulators’ inability to manage, monitor, and identify the assets. There is also the risk that cryptocurrency could replace a country’s local currency and avoid exchange restrictions.

Iceland Restricts Power Supply to Cryptocurrency Mining Companies Due to Power Shortage

By
Adam Barry
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0

Landsvirkjun, Iceland’s primary utility, is facing an electrical scarcity. As a result, the country has reduced supply to Bitcoin miners, data centers, aluminum shelters, and other industrial clients.

Reduced hydro reservoir levels, delayed sourcing of electricity from an alternative source, and a problem at the power plant has led to the cut.

According to the executive vice president for sales and customer assistance, Tinna Traustadottir, the cut-off applies to big clients with short-term contracts. Moreover, high demand has also led to Iceland implementing the decision.

Crypto miners opened in Iceland due to low power costs

Smelters in Iceland which began years ago due to the country’s cheap power, are Iceland’s biggest energy consumer. Cryptocurrency mining, on the other, is new to the country. The mining companies opened in the country to take advantage of the cheap power for mining new coins due to the increased prices and demand as the world goes through a financial crisis.

Mining firms that have established themselves in the region because of this include Bitfury Holding BV, Genesis Mining Ltd., Hive Blockchain Technologies Ltd, among others

Because of the cutbacks, Iceland will not grant any request from a new customer for electricity to mine.

Many countries have tried to restrict bitcoin mining

This incident is not the first to try and limit Bitcoin mining. In Sweden, two director generals proposed restricting mining operations to meet climate change requirements. China, on the other hand, has completely banned crypto mining.

Finbold has reported on the harm crypto mining has on the environment. It has started that Bitcoin mining operations consumed 143TWh up until May 5, 2021. This figure is eight times more than what Alphabet Inc Class C (NASDAQ: GOOG) and Meta Platforms Inc (NASDAQ: FB) consume together, 17TWh.

Other countries, such as El Salvador, have accepted Bitcoin mining. The government named Bitcoin as a legal tender and regulated its use. Moreover, El Salvador kicked off Bitcoin mining by officially mining its first coin using volcanic energy.

Although experts have condemned Bitcoin mining for its negative impact on the environment, El Salvador’s use of volcanic energy indicates an era of sustainable mining. Despite this, countries that do not support the currency have mentioned its environmental impact as a reason for banning it.

The Bank of Thailand Warns Other Banks Against Trading in Cryptocurrency

By
Adam Barry
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0

The Bank of Thailand (BoT) has advised other banks to avoid trading in cryptocurrency due to the industry’s volatility.

Many banks are entering the crypto space

According to Chayawadee Chai-Anant, the senior director of the BoT, there are significant risks involved in the cryptocurrency sector; thus, banks cannot cushion their clients. He adds that banks are responsible for client deposits; hence they should not take the additional risk of trading in cryptocurrency. However, the situation is different if the bank is a shareholder.

The warning comes when an Increasing number of Thailand citizens are venturing into digital currency. Furthermore, many banks are starting to invest in the sector. For example, Siam Commercial Bank Plc acquired the Bitkub crypto exchange. Bank of Ayudhya, on the other hand, allocated capital to the Zipmex exchange.

Thailand’s Securities Exchange Commission has reported that crypto transactions reached $6 million in November.

 The BoT has issued other warnings on crypto 

This warning is not the first from the BoT. The regulator has warned people numerous times about the growing industry. For instance, it previously warned companies on receiving cryptocurrency payments saying that it would hinder BoT’s ability to regulate the economy. In addition, the BoT highlighted companies with unclear asset backing.

The Thailand government has not made its stance on the sector clear. Nevertheless, the BoT and other agencies are working to regulate cryptocurrency. The Securities and Exchange Commission has proposed laws to protect crypto investors. These laws prevent crypto custodians from taking benefits from investors’ assets.

As per the new regulations, crypto custodians will close their clients’ accounts on business days to keep them intact and ensure they don’t use them to benefit someone else.

Thailand has been strict in regulating cryptocurrency after its complaint against Binance. The country claimed that Binance operated illegally in Thailand.

The regulator has also previously warned people who trade in the digital currency of risks like theft, money laundering, and price volatility. It also added that cryptocurrency was not a legal tender; thus, investors could face the consequences from the regulator.

Moreover, the BoT is still developing a Central Bank Digital Currency (CBDC) and guidelines for their use.

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