The cryptocurrency market experienced a significant downturn on 1 February, following the announcement of new tariffs imposed by the US. President Donald Trump’s decision to apply 25% tariffs on goods from Canada and Mexico and 10% on Chinese imports led to a market-wide sell-off. Bitcoin’s price dropped by over 5%, reaching a low of around $91,200, before rebounding slightly to about $94,000. Despite the recovery, Bitcoin remains approximately 13% below its all-time high of $109,000.
This price drop has had a ripple effect on the wider crypto market. In the past 24 hours, Ethereum saw a sharp decline of nearly 20%, while other major altcoins such as Ripple, Solana, and Binance Coin also took significant hits, with losses reaching as high as 22%. Trading volume surged by over 200%, indicating heightened selling pressure, which often signals market panic.
Bitcoin’s recent crash follows a period of positive price movement after President Trump’s inauguration, but the new tariff policies have shaken investor confidence. With the overall global crypto market cap dropping by almost 12%, concerns are mounting that long-term investors are capitulating, selling at a loss or lower profits. Market experts, including BitMEX CEO Arthur Hayes, have warned that the risk of a financial crisis could be looming, adding to the uncertainty in the markets.
India is reassessing its position on cryptocurrencies as other countries adopt more favourable policies. The review comes after US President Donald Trump’s recent moves to overhaul digital asset regulations, prompting Indian authorities to revisit their own discussion paper, initially scheduled for release in September 2024. Economic Affairs Secretary Ajay Seth highlighted the need for a broader perspective, given that cryptocurrencies transcend national borders.
Government scrutiny of digital assets remains strong despite increasing local investment in the sector. India’s Financial Intelligence Unit issued compliance notices to offshore exchanges in late 2023, leading to Binance paying a fine of 188.2 million rupees in June 2024. The regulatory approach has been strict, with high trading taxes discouraging domestic participation.
Differing views persist within Indian authorities regarding digital currencies. While market regulators have suggested a multi-agency framework for oversight, the central bank continues to express concerns about potential economic risks posed by private virtual assets. The ongoing policy review suggests that any regulatory adjustments will take global trends into account.
Thailand’s Securities and Exchange Commission (SEC) is launching a blockchain-based trading platform to enable securities companies to trade digital tokens. The move aims to enhance efficiency in the capital market and provide investors with broader access to tokenised securities.
According to the SEC, new regulations will facilitate the issuance and trading of electronic securities, including tokenised bonds and investment-focused digital assets. Four token projects have already been approved, with two more under review, particularly in green finance and investment-based initiatives.
The system will fully digitalise bond trading, covering settlement, investor registration, and payments. While specific blockchain networks were not disclosed, the SEC confirmed that interoperability standards will connect multiple chains in the future.
Thailand’s crypto landscape is shifting towards institutional markets, despite restrictions on crypto payments. The government is also exploring a stablecoin backed by government bonds, reflecting a cautious but progressive approach to digital assets.
Kraken has announced it will stop supporting Tether’s USDT and several other stablecoins for European clients by 31 March. The move follows updated guidance from EU regulators under the Markets in Crypto Assets Regulation framework. The exchange confirmed that affected assets include USDT, Tether’s euro stablecoin, PayPal’s PYUSD, UST, and TUSD.
Kraken is the third major exchange to delist Tether in Europe, following similar decisions by Coinbase and Crypto.com. While the wave of delistings continues, Tether remains financially strong, reporting a record $13 billion in net profits in 2024. The company’s large holdings in US Treasury bonds have further reinforced its stability.
Despite the European crackdown, Tether is expanding elsewhere. El Salvador, known for its pro-Bitcoin stance, has welcomed Tether’s establishment of its new headquarters in Central America. As regulatory pressure mounts in the EU, Tether’s focus on other markets may help offset potential losses.
India is re-evaluating its cryptocurrency stance as global attitudes towards digital assets shift. Economic Affairs Secretary Ajay Seth stated that the government is reviewing its discussion paper on cryptocurrency, originally set for release in September 2024, to reflect changing international regulations. The move follows recent policy adjustments in multiple jurisdictions, prompting India to reassess its approach.
Despite strict regulations, including a 30% capital gains tax and a 1% transaction levy, crypto adoption in India continues to grow. Authorities maintain strong regulatory control, with the Financial Intelligence Unit taking action against non-compliant exchanges. Meanwhile, the Reserve Bank of India remains cautious, while market regulators propose a multi-agency approach to oversight, signalling a possible shift in policy.
India’s complex relationship with cryptocurrency dates back to 2013, when the RBI first issued warnings. In 2018, a banking ban crippled the industry, only to be overturned by the Supreme Court in 2020. While the government supports blockchain and central bank digital currencies, the fate of private cryptocurrencies remains uncertain. As global regulations evolve, India’s next steps could have far-reaching consequences for the crypto sector.
The digital asset market continues to grow, with a shift towards softer regulation following increased mainstream adoption. Key developments include the UK’s pilot programme for digital gilts and a surge in exchange-traded funds launched by global asset managers. As the momentum builds, there’s a growing demand for a more complex financial ecosystem to support the evolving use cases of digital assets, driving opportunities for jurisdictions that can meet these needs.
However, as with any fast-growing industry, risk mitigation remains crucial. International financial centres are responding with a cautious, risk-based approach, while global cooperation is vital to prevent bad actors and protect reputations. Examples include the British Virgin Islands (BVI), which has created a strong regulatory framework for digital assets, attracting numerous businesses and regulatory innovation.
Global collaboration has also been crucial, with initiatives like the Financial Action Task Force’s standards on virtual asset service providers (VASPs) aimed at combating money laundering and terrorist financing. This is complemented by efforts from Europe’s MiCA regulation, which sets a strong precedent for other regions, including the Caribbean, to follow.
As technological advancements continue to enhance compliance and financial crime prevention, ongoing education and cross-jurisdictional collaboration will be key in ensuring the region maintains its position as a secure and attractive hub for digital asset businesses. The Caribbean, in particular, stands to benefit from embracing these innovations, provided it upholds high standards of financial integrity and transparency.
El Salvador’s Legislative Assembly has amended its Bitcoin Law, making it optional for businesses to accept Bitcoin as payment. The change comes as part of the conditions set by the International Monetary Fund (IMF) for a $1.4 billion loan aimed at strengthening the country’s economy.
In 2021, El Salvador became the first country to adopt Bitcoin as legal tender alongside the US dollar. However, the mandatory Bitcoin acceptance for businesses faced criticism due to the cryptocurrency’s volatility and the population’s limited understanding of digital currencies.
The recent reforms allow businesses to choose whether to accept Bitcoin, and the government will no longer accept Bitcoin for tax payments. This move aims to address concerns raised by the IMF about the potential risks to financial stability and consumer protection while still maintaining Bitcoin’s legal status in the country.
In response to these concerns, the government also plans to scale back its involvement in Bitcoin-related initiatives, including reducing the use of the Chivo Wallet app.
Norway’s central bank has built up over $500 million in indirect Bitcoin exposure through its investments in MicroStrategy and other crypto-focused companies. Research from K33 shows that Norway’s exposure to Bitcoin has nearly tripled in the past year as allocations to crypto-related firms have increased.
The country’s sovereign wealth fund, managed by Norges Bank Investment Management, holds 0.72% of MicroStrategy’s total shares, worth around $514 million as of December 2024. This translates to an indirect holding of roughly 3,214 Bitcoin. Alongside MicroStrategy, the fund also has investments in Tesla, Coinbase, Marathon Digital, Riot Platforms, and Metaplanet, adding another $61 million in exposure.
While Norges Bank’s strategy follows rule-based sector weighting rather than direct Bitcoin purchases, its growing involvement in crypto-linked firms signals increasing institutional acceptance of Bitcoin. Similar investment trends have been seen in Switzerland, where central banks have also allocated funds to MicroStrategy amid its expanding Bitcoin reserves.
Bitcoin experienced a 6% drop on 27 January, as stock markets reacted to the debut of China’s open-source AI model, DeepSeek, which some have dubbed ‘AI’s Sputnik moment.’ The new model developed on a modest budget of just under $6 million, raised concerns in US markets as it posed a competitive threat to American AI giants like OpenAI. The surprise launch led to significant losses across tech stocks, including Nvidia, Apple, and Tesla, with Nvidia seeing a record-breaking 17% drop. Energy stocks, which had relied on revenue from power-intensive US AI models like ChatGPT, also suffered.
While the impact on Bitcoin and other cryptocurrencies may seem directly linked to DeepSeek, experts suggest the broader market sentiment played a bigger role. Cryptocurrency, often seen as a “risk-on” asset, typically mirrors the movements in stock markets. As investor fears triggered sell-offs, major coins like Bitcoin and Ether saw their values fall alongside tech stocks. Despite the dip, some analysts remain optimistic, noting that Bitcoin’s quick recovery amidst a broader market decline signals positive prospects.
DeepSeek’s impact on Bitcoin, however, seems minimal in the long run. The open-source nature of the AI model allows others to incorporate its innovations into their own developments, potentially accelerating AI progress worldwide. While concerns about DeepSeek’s political and privacy implications linger, particularly in the US and EU, the model is expected to drive advancements in AI at a lower cost. Yet, its influence on crypto markets is likely to remain limited, with institutional investors continuing to view cryptocurrencies as a risk-heavy asset class.
The Czech National Bank (CNB) has revealed plans to assess the possibility of adding Bitcoin (BTC) to its reserve assets, despite opposition from European Central Bank (ECB) President Christine Lagarde. The decision follows a review of its 2024 reserve management strategy, where the CNB highlighted ongoing efforts to diversify its investments. While no immediate changes will be made, the central bank intends to conduct a thorough review before making any decisions.
Reports suggest the CNB could allocate up to 5% of its reserves to Bitcoin, amounting to over $7 billion. Governor Aleš Michl has expressed interest in Bitcoin as a potential diversification tool, calling it a “very interesting” asset. However, the ECB remains strongly opposed, with Lagarde insisting that central bank reserves must remain liquid and secure, free from concerns over money laundering or criminal activity.
The CNB’s exploration of Bitcoin aligns with a broader global trend of national reserves incorporating digital assets. In the US, former President Donald Trump recently signed an executive order allowing a crypto working group to study the potential for a national Bitcoin stockpile. With growing interest among G20 nations, the debate over Bitcoin’s role in central banking is far from over.
