The BRICS group of countries (Brazil, Russia, India, China, and South Africa) is collaborating on the creation of an independent payment system using blockchain and digital technologies, according to a report by Russian news agency TASS. The objective is to develop a secure, efficient, and blockchain based payment system that is convenient for governments, ordinary people, and businesses. It should also be cost-effective and free from political influence. This initiative is part of the BRICS group’s efforts to enhance its role in the international monetary system and reduce reliance on the US dollar.
Kremlin aide Yury Ushakov stated in an interview with TASS that an independent payment system is an important future goal. By developing their own payment system, BRICS countries aim to enhance their financial sovereignty and reduce vulnerabilities associated with relying on existing global payment systems.
The report also highlighted the BRICS group’s ongoing efforts to reduce reliance on the US dollar, a concept known as de-dollarization. The development of the Contingent Reserve Arrangement will play a crucial role in this aspect as it will enable the use of currencies other than the US dollar. This diversification aims to provide BRICS countries with more stability and flexibility in their financial transactions and reduce exposure to potential economic risks associated with a single dominant currency.
The endorsement of crypto assets, tokenization, and AI underscores the importance of embracing technological advancements in the future of finance.
The most popular cryptocurrency, bitcoin, experienced a rally in price during the last two weeks. Contrary to some predictions, approval of the Exchange Traded Funds (ETF) in the United States pushed the request for the cryptocurrency, creating the cycle in which the bitcoin price went up in a short time. The previous all-time high price traded for one bitcoin was $69.000 back in November 2021. The bitcoin is now traded above the $67.000
Back in January, the US Securities and Exchange Commission (SEC) approved the first bitcoin ETF after seven years since the first request. The SEC granted 11 ETFs and some of the biggest financial firms and institutional investors announced that their ETF was a success. The SEC’s decision made a clear path for institutional investors to offer bitcoin as an investment to its customers.
Having in mind the number of bitcoins consumed by the ETFs daily, and considering that the bitcoin mining industry can produce around 900 bitcoins per day, the demand for bitcoins continues (and will continue) to grow. It is important to mention that, regardless of the large demand, the bitcoin creation can not be hurried up or anyhow ramped up. Bitcoin has a set emission (fixed supply) which is planned and embedded into the consensus mechanism that underlays cryptocurrency.
Another event, also embedded into the bitcoin protocol, played a significant role and will continue to do so in forthcoming days. In approximately 48 days (mid-April 2024) bitcoin will have another ‘halving’ event. That is a planned reduction of the reward for miners in the form of newly minted coins. At this moment, the reward for miners who find a valid bitcoin block is 6.25 bitcoins. After the next halving, the reward will drop to 3.125 newly created bitcoins per block. This will reduce the number of daily minted bitcoins to around 450, creating even more pressure on the demand side, hence a possible new time-high valuation for the bitcoin. The halving occurs once in four years and it has influenced the price of bitcoin throughout its history. No reason to believe it will be different this time.
South Korea’s Personal Information Protection Commission (PIPC) has launched an investigation into cryptocurrency project Worldcoin following numerous complaints about its collection of personal information. Of particular concern is the project’s use of iris scanning in exchange for cryptocurrency. The PIPC announced on Monday that it will examine company’s collection, processing, and potential overseas transfer of sensitive personal information, and will take action if any violations of local privacy rules are found.
It is worth noting that OpenAI, which co-founded Worldcoin, was fined last year by the privacy watchdog for leaking personal information of South Korean citizens through its ChatGPT application. This connection with OpenAI adds weight to the concerns surrounding the handling of personal data by Worldcoin.
Worldcoin is an identity-focused cryptocurrency project. Participants in the protocol receive WLD tokens in return for signing up. The project’s unconventional sign-up process has also raised concerns in other jurisdictions. As of now, company has not responded to the investigation or the accusations.
GOP senators argue that Fed-backed digital currencies could provide the government with transaction-level data on individual users, compromising privacy. Senator Ted Cruz described CBDCs as “programmable money” that, if not designed to emulate cash, could give the federal government significant insight into users’ financial activities.
The Biden administration has been studying the use of cryptocurrencies since 2022, with reports outlining their potential benefits and risks. While the administration supports ongoing research and evaluation of CBDCs, it has not explicitly endorsed their creation without an act of Congress.
Both the Federal Reserve and the Treasury Department have explored the potential uses and structures of CBDCs. They believe that CBDCs could lead to a more efficient and inclusive payment system. The Federal Reserve highlights the safety of CBDCs, as they are liabilities of the central bank without associated credit or liquidity risks.
The Republican legislation would prevent the Federal Reserve from authorizing the use of Fed-backed stablecoins by individuals and third-party institutions such as banks and credit unions.
Central bank digital currencies have gained international attention, with advocates touting their benefits and authorities raising concerns about operational consequences. The Bank for International Settlements (BIS) warns about the potential risks associated with providing the general public access to central bank money through CBDCs.
China’s Supreme People’s Procuratorate (SPP) is ramping up efforts to combat cybercrime by targeting criminals who use blockchain and metaverse projects for illegal activities. The SPP is alarmed by the recent surge in online fraud, cyber violence, and personal information infringement. Notably, the SPP has observed a significant rise in cybercrimes committed on blockchains and within the metaverse, with criminals increasingly relying on cryptocurrencies for money laundering, making it challenging to trace their illicit wealth.
Ge Xiaoyan, the Deputy Prosecutor-General of the SPP, highlights a 64% year-on-year increase in charges related to cybercrime-related telecom fraud, while charges linked to internet theft have risen nearly 23%, and those related to online counterfeiting and sales of inferior goods have surged by almost 86%. Procuratorates have pressed charges against 280,000 individuals involved in cybercrime cases between January and November, reflecting a 36% year-on-year increase and constituting 19% of all criminal offenses.
The People’s Bank of China (PBoC) acknowledges the importance of regulating cryptocurrency and decentralized finance in its latest financial stability report. The PBoC emphasizes the necessity of international cooperation in regulating the industry.
Despite the ban on most crypto transactions and cryptocurrency mining, mainland China remains a significant hub for crypto-mining activities.
During a crypto event in London, the UK’s Economic Secretary to the Treasury Bim Afolami stated that the government is working intensively to ensure the new legislation regulating stablecoins and crypto staking. However, no specific details about the regulations were provided due to the ongoing developments in the field.
In 2022, UK Prime Minister Rishi Sunak pledged to establish the country as a global crypto hub, emphasizing the need for crypto firms to be able to invest, innovate, and scale up within the UK. Progress on implementing clearer regulations has been slow, despite calls from cryptocurrency firms for more concise rules.
The UK Law Commission published recommendations in July 2023 suggesting conducting a common law analysis of crypto assets and establishing an industry-specific panel consisting of technical experts, academics, and legal practitioners to advise courts on crypto-related legal matters.
On October 30, 2023, the UK government announced plans to introduce more crypto-specific regulations in 2024. This includes bringing the regulation of fiat-backed stablecoins under the purview of the Financial Conduct Authority (FCA).
Crypto transactions in Indonesia are under the dual taxation, including a 0.1% income tax and a 0.11% value-added tax (VAT), imposing a significant burden on users. Additionally, local crypto exchanges are required to contribute around 0.04% of their revenue to the national crypto stock market. Despite the overall growth of the cryptocurrency market, Indonesia’s crypto tax revenue experienced a downturn primarily due to a notable 51% decrease in crypto transaction volumes during 2023 compared to the previous year.
Local exchanges are also unsatisfied with the high tax rates and believe they are responsible for resulting in thinner revenues, as users seek out alternative platforms. The suggestions made by local exchanges, particularly the proposal to subject crypto transactions solely to income tax, underscore the need to foster growth and stability in the Indonesian cryptocurrency market.
In its statement, the SEC stated that the granting of the bitcoin ETF does not mean that the SEC is promoting the cryptocurrency and called for individual investors to be cautious when they invest in digital assets.
What is the exchange-traded fund?
Invented back in the 1990s, exchange-traded funds are baskets of bonds or other assets that are usually managed by the leading financial investment firms. They can be traded on the stock exchanges and, therefore, realise gains and losses from trading. They are invented as a platform for the individual investors to participate. By investing in several assets and diversifying its portfolio, individual investors reduce the chance for significant losses.
Why is the bitcoin exchange-traded fund important for digital assets?
Considering that cryptocurrency use and safe storage still require certain technical knowledge, the ETF offers the opportunity for individual investors to invest directly in the cryptocurrency markets without the risk associated with cybersecurity. The bitcoin exchange-traded fund opens the way to invest in digital assets managed by professionals. From eleven companies that applied for the SEC approval, there are some Wall Street financial giants such as BlackRock or Van Eck but also a new wing of the crypto and innovative tech industry such as Fidelity or Ark Investments. Together, they manage hundreds of billions of dollars that will now be exposed to the cryptocurrency market. The ETF will follow the spot price of the bitcoin cryptocurrency, and may benefit the price stability of bitcoin. It will also serve as a safeguard for individual investors from the industry known for its many blunders
The SEC announcement comes one day after the security incident related to their X account. In the alleged hack, shared content was news that the SEC approved spot bitcoin exchange-traded fund. Was this a message that went public by accident or mistake from the account holders? Or was it a malicious act from the third party to undermine the government agency? Answering this question will be the primary purpose of the FBI investigation announced yesterday by the Securities and Exchange Commission
The Australian Treasury has initiated efforts to further fine tune regulation around cryptocurrency. It has published a consultation paper titled “Regulating digital asset platforms” to outline its approach. Instead of creating new rules specifically for cryptocurrencies, the regulation of crypto exchanges will be carried out under existing financial services laws.
The main focus of this regulatory framework is to oversee and regulate cryptocurrency exchanges and service providers, rather than individual cryptocurrencies or tokens. The Australian Treasury is considering making it mandatory for crypto exchanges to obtain a financial services license from the local financial regulator. These proposed rules will only apply to crypto exchanges holding more than $3.2 million ($5 million AUD) or more than $946 ($1,500 AUD) per individual.
Why does it matter?
With a quarter of Australians owning some sort of cryptocurrency, the treasurer, Jim Chalmers, stated that they are taking swift and systematic action to create a regulatory framework that balances consumer protection with the promotion of innovation in the digital asset industry.
Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets, and amending regulations. The EU market rules for crypto-assets
Crypto-assets are one of the main applications of distributed ledger technology. Crypto-assets are digital representations of value or of rights that have the potential to bring significant benefits to market participants, including retail holders of crypto-assets. Representations of value include external, non-intrinsic value attributed to a crypto-asset by the parties concerned or by market participants, meaning the value is subjective and based only on the interest of the purchaser of the crypto-asset.
