Economic Archives | Page 420 of 708 | Digital Watch Observatory

Are digital taxes the new frontline in global trade warfare?

While President Trump’s tariffs on goods dominate headlines, a more consequential battle is brewing over digital services. US tech giants like Meta, Google, and Amazon wield unparalleled global dominance in this sector.

In just-in-time analysis, Jovan Kurbalija argues that Trump’s fixation on traditional trade levers (steel, cars) overlooks a critical vulnerability for the United States: the use of digital services taxes (DSTs) and regulatory pressure by the EU and other trading partners to counterbalance new US tariff.

The collapse of OECD-led multilateral tax negotiations in 2024 has triggered a resurgence of unilateral DSTs, from Canada’s retroactive levy to India’s expanded ‘equalization levy’ and revived EU proposals for bloc-wide digital taxes.

Kurbalija analyses how digital taxation redefines trade diplomacy, with implications ranging from recalibrated leverage (host nations exploiting US tech dependence) to governance gaps (WTO rules ill-equipped for digital disputes). It poses new challenges for digital diplomacy, AI negotiations, and internet governance.

He warns that failure to address this ‘invisible trade war’ could escalate tit-for-tat measures, jeopardizing both physical goods trade and the digital economy. The rise of data and sovereignty will be inevitable.

Ultimately, the piece underscores a paradigm shift: in the 21st-century economy, algorithms, and data flows are as strategically vital as steel beams—and more impactful for economic well-being and global prosperity.

For more information on these topics, read more here.

Study finds 55 million US adults now use cryptocurrency

A new study by the National Cryptocurrency Association (NCA) has revealed that 55 million US adults, or 21% of the population, now use cryptocurrency. The survey highlights how digital assets are being adopted across different age groups, income levels, and industries.

Ownership remains highest among younger adults, with 67% of holders under 45. The study also found significant adoption among older Americans, with 15% of users over 55.

Women now represent 31% of all crypto holders. The adoption is notably strong in the construction sector (12%), surpassing financial services (7%).

Beyond investment, many users see cryptocurrency as a tool for learning, personal growth, and innovation. Forty-five percent value its role in education. The same percentage enjoys the excitement of being part of an emerging industry.

Nearly 40% use crypto for purchases, and 9% transact with it daily. Meanwhile, 81% want to expand their knowledge, particularly regarding security, regulation, and blockchain technology.

Regulation remains a key concern, with 64% supporting government oversight but 67% fearing it could hinder innovation.

Many users also see crypto’s broader societal benefits, with 45% citing its role in financial inclusion and digital transaction efficiency. Additionally, 33% recognise its potential to enhance global cooperation.

For more information on these topics, visit diplomacy.edu.

AppLovin joins TikTok takeover frenzy

As the 5 April deadline approaches for TikTok to secure a non-Chinese buyer or face a US ban, the list of potential acquirers continues to grow.

Marketing platform AppLovin has submitted a preliminary bid to acquire TikTok’s operations outside of China, aiming to expand its footprint in the global digital advertising arena.

AppLovin’s move adds to the mounting interest in TikTok, with Amazon and a consortium led by OnlyFans founder Tim Stokely also entering the fray.

These developments come amid US government concerns over TikTok’s Chinese ownership, which officials argue poses national security risks, a claim that TikTok and its parent company, ByteDance, have consistently denied.

The White House has taken an unusually active role in facilitating the sale.

President Donald Trump indicates openness to a deal wherein China approves the transaction in exchange for relief from US tariffs on Chinese imports.

This intertwining of trade negotiations and tech acquisitions underscores the complex geopolitical landscape influencing the fate of TikTok in the US.

Private equity firm Blackstone is also evaluating a minority investment in TikTok’s US operations, potentially joining non-Chinese shareholders like Susquehanna International Group and General Atlantic in contributing fresh capital.

The future of TikTok, an app used by nearly half of all Americans, remains uncertain as the deadline looms and negotiations continue.

For more information on these topics, visit diplomacy.edu.

Pennsylvania to host $10 billion AI natural gas-powered data center on former coal site

The now-defunct Homer City Generating Station site, once the state’s largest coal plant, is repurposed into a massive $10 billion natural gas-powered data centre campus.

The development aims to meet the surging electricity demands of tech giants racing to power AI and cloud computing infrastructure.

Located about 50 miles east of Pittsburgh, the proposed facility will feature seven gas-fired turbines capable of generating up to 4.5 gigawatts of electricity, enough to power roughly 3 million homes.

The project’s backers, a group of investors operating under Homer City Development, say the campus will host advanced data centres directly on-site.

Construction is expected to begin this year, with the first wave of power projected to come online by 2027.

The developers note that the existing infrastructure left behind by the coal plant offers a significant advantage.

Transmission lines, substations, and water access link the site to the broader energy grid covering the Mid-Atlantic and New York regions.

Additionally, the location sits atop the Marcellus Shale, one of the most abundant natural gas reserves in the US, and has been awarded a $5 million state grant to extend a new gas pipeline to the property.

Homer City Generating Station was decommissioned in 2023 after over five decades of operation.

Its shutdown came amid declining coal competitiveness, warmer winters that reduced electricity demand, and increasing environmental regulations.

Why does it matter?

The launch of OpenAI’s ChatGPT in late 2022 provoked the birth of other LLMs and, therefore, the need to back up and enhance LLMs’ evolution, sparking global demand for high-powered computing systems.

Tech firms are now in a race to secure reliable energy sources, reviving interest in natural gas plants and nuclear energy as concerns arise over potential electricity shortages.

Pennsylvania’s Homer City initiative mirrors moves seen elsewhere in the country, including the upcoming reopening of the Three Mile Island nuclear facility, which will provide power under a long-term agreement with Microsoft.

These examples show the growing pressure on power infrastructure as AI pushes the limits of existing grids and forces a rethinking of how and where data centres should be built.

For more information on these topics, visit diplomacy.edu.

Lawmakers demand answers on Trump’s crypto connections

The US lawmakers are intensifying their scrutiny of President Donald Trump’s ties to the cryptocurrency industry. Concerns over conflicts of interest and regulatory transparency continue to grow.

Senator Elizabeth Warren (D-MA) and Representative Maxine Waters (D-CA) sent a letter to SEC Acting Chair Mark Uyeda on 2 April. They demanded records on World Liberty Financial, Inc. (WLFI), a crypto firm linked to the Trump family.

The firm has raised millions and sparked allegations of potential bias in the SEC’s handling of crypto enforcement.

The letter details the Trump family’s significant financial stake in WLFI. They hold a 75% claim to token revenue, which has already earned them an estimated $390 million.

Lawmakers expressed concern about the SEC’s lack of action on the firm. They worry that the broader crypto market could be influenced by the Trump family’s financial interests.

In particular, they questioned the SEC’s sudden decision to pause its enforcement case against Tron founder Justin Sun, who also invested heavily in WLFI.

The concerns are compounded by the launch of WLFI’s stablecoin, USD1. It occurred shortly before lawmakers voted on relevant legislation, which they argue could indicate undue political influence.

The SEC has until 14 April to respond. The debate over crypto regulation is likely to intensify as the investigation continues.

For more information on these topics, visit diplomacy.edu.

The US House Committee passes a bill to strengthen stablecoin oversight

The US House Financial Services Committee has passed a bill aimed at regulating stablecoins, moving it to a full House vote. On 2 April, the Committee approved the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act in a 32-17 vote.

The bill outlines a regulatory framework for payment stablecoins such as USDT and USDC. It mandates transparency in token reserves, ensuring issuers hold sufficient dollar-equivalent assets to back their circulating supply.

Key provisions focus on consumer protection and reducing risk for stablecoin users. The bill also aims to strengthen the role of the dollar in digital finance.

Supporters argue the bill will modernise the US payment infrastructure, making transactions faster and more cost-effective. They also emphasise the importance of maintaining space for innovation.

Congressman Dan Meuser highlighted that the legislation reinforces the dollar’s position as the world’s reserve currency. Meanwhile, Congressman Troy Downing emphasised his role in balancing innovation with strong consumer protections.

For more information on these topics, visit diplomacy.edu.

OpenAI CEO says India leads in AI creativity

Sam Altman sparked interest among Indian users on X after praising the country’s rapid AI adoption and sharing an AI-generated image of himself playing cricket. In his 2 April post, the OpenAI CEO called India’s AI creativity an ‘explosion,’ claiming the country was outpacing the world in adoption rates.

Users questioned why Altman singled out India, with some turning to AI chatbots like Perplexity and Grok for verification. His comments followed a February visit to India, where he met IT Minister Ashwini Vaishnaw and highlighted India as OpenAI’s second-largest market.

Altman’s remarks also came shortly after OpenAI’s GPT-4o update, which enhanced AI-generated images and illustrations. To showcase this, he shared an anime-style image of himself as a cricket player, sporting a Team India jersey.

For more information on these topics, visit diplomacy.edu.

Swiss shift to digital payments opens door for stablecoins

Switzerland is witnessing a significant shift towards digitalisation. A new survey shows debit card payments have surpassed cash for the first time.

In 2024, 35% of in-store purchases were made with debit cards, compared to 30% using cash. It marks a major change from 2017 when cash accounted for 70% of payments.

While Switzerland has traditionally favoured cash, especially for privacy reasons, the trend towards digital payments is undeniable.

The shift is partly attributed to the pandemic, which accelerated the move away from cash. According to economist Alexander Koch, countries like Switzerland, traditionally attached to cash, are now following international trends.

The cultural change indicates a broader willingness to embrace digital forms of payment. In Switzerland, 18% of payments are made via mobile apps, while credit cards make up 14%.

With digital payments on the rise, experts are seeing increased potential for stablecoins and tokenised assets.

Dominic Weibel from Bitcoin Suisse AG believes that the growing use of mobile payment apps sets the stage for Swiss stablecoins to thrive. He suggests tokenised Swiss francs could soon be integrated into mobile apps.

Despite the growing digital shift, the Swiss National Bank (SNB) remains cautious about introducing a central bank digital currency (CBDC). However, institutional engagement with blockchain and digital bonds continues to grow. It suggests that Switzerland’s digital future is on track.

For more information on these topics, visit diplomacy.edu.

Bill Gates foresees AI-driven two-day work weeks

Bill Gates has predicted that AI will reduce work hours significantly, with two-day work weeks becoming a reality in the next decade.

His vision contrasts with views in India, where figures like Narayana Murthy and S.N. Subrahmanyan argue for longer work hours instead of reducing them, believing they are crucial for economic growth.

However, Harsh Goenka and Harish Mariwala, who focus on ambition and productivity instead of hours worked, have a different take. They stress the importance of quality instead of quantity in work hours.

Studies, such as those from Iceland and New Zealand, suggest that reduced working hours can lead to higher productivity and a better work-life balance.

In Iceland, trials reducing weekly hours from 40 to 35 saw workers feeling more energised and less stressed, while New Zealand’s Perpetual Guardian found that employees completed tasks in fewer hours, raising engagement and reducing stress.

Despite Gates’ prediction, the idea of working only two days a week seems extreme, especially considering his past work ethic.

Gates himself worked long hours instead of fewer ones during his early career, fearing mistakes could cost him his company, but he acknowledges that AI and technology have shifted the landscape.

For more information on these topics, visit diplomacy.edu.

North Korean hacker group cashes in on crypto trade

A wallet linked to North Korea’s notorious Lazarus Group has reportedly sold 40.78 Wrapped Bitcoin (WBTC) for $3.51 million, exchanging it for 1,847 Ethereum (ETH), according to data from SpotOnChain.

Instead of holding onto the ETH, the wallet redistributed 2,507 ETH across three separate addresses, with the largest portion of 1,865 ETH sent to another wallet allegedly tied to the hacker group.

The wallet originally purchased the 40.78 WBTC in February 2023 for around $999,900, when the price of WBTC averaged $24,521. Instead of selling earlier, the group waited until WBTC surged to $83,459, securing a realised profit of $2.51 million, representing a 251% gain over two years.

Lazarus Group, instead of operating openly, has been using complex laundering techniques to move stolen funds, particularly after its attack on crypto exchange Bybit.

In March, the group allegedly laundered nearly 500,000 ETH—worth $1.39 billion—through various transactions in just ten days, instead of keeping the stolen assets in a single location. At least $605 million was processed via the THORChain platform in a single day.

According to Arkham Intelligence, a wallet linked to the group still holds approximately $1.1 billion in crypto, with substantial reserves in Bitcoin, Ethereum, and Tether.

Meanwhile, Google’s Threat Intelligence Group has reported increased efforts by North Korean IT workers to infiltrate European tech and crypto firms, acting as insider operatives for state-sponsored cybercrime networks like Lazarus Group instead of working as legitimate employees.

For more information on these topics, visit diplomacy.edu.