Značka: Bitcoin Regulation

IMF urges El Salvador to remove Bitcoin's status as legal tender

Members of the executive board at the International Monetary Fund are urging lawmakers in El Salvador to no longer recognize Bitcoin as legal tender.The IMF reported on Tuesday that though digital payments had the potential to increase financial inclusion in the Central American nation, the use of Bitcoin (BTC) as legal tender carried “large risks” related to financial stability, financial integrity and consumer protection. The executive board directors urged El Salvador authorities to “narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status,” also expressing concern about the potential risks of issuing Bitcoin-backed bonds.The officials’ recommendation came following the conclusion of an Article IV consultation in El Salvador. According to the IMF, during such a consultation, a team of economists visits a country “to assess economic and financial developments and discuss the country’s economic and financial policies with government and central bank officials.” Prior to the implementation of El Salvador’s Bitcoin Law in September 201, IMF officials warned that some of the consequences of a country adopting BTC as a national currency “could be dire,” including the risk of having domestic prices becoming highly unstable, and assets being used contrary to Anti-Money Laundering and Combating the Financing of Terrorism measures. The IMF has previously issued statements to small nations considering adopting crypto, claiming that to do so would “raise risks to macroeconomic and financial stability as well as financial integrity.”Since the Bitcoin Law went into effect in September, El Salvador President Nayib Bukele has used his Twitter account to announce several BTC buys totaling 1,801 BTC — worth roughly $67 million at the time of publication. The latest purchase of 410 BTC came as the price of the crypto asset dropped below $37,000 for the first time since July 2021. Nope, I was wrong, didn’t miss it.El Salvador just bought 410 #bitcoin for only 15 million dollars Some guys are selling really cheap ‍♂️ https://t.co/vEUEzp5UdU— Nayib Bukele (@nayibbukele) January 21, 2022Cointelegraph reported on Jan. 14 that El Salvador’s recognition of BTC as legal tender may be impacting the country’s sovereign credit outlook, according to Moody’s Investors Service. Analyst Jaime Reusche reportedly said that Bitcoin “certainly adds to the risk portfolio” of a country that has struggled with liquidity issues. According to data from Cointelegraph Markets Pro, the price of Bitcoin is $36,550 at the time of publication, having fallen more than 12% in the last seven days. The crypto asset briefly dipped to the $33,000s on Jan. 24 before returning to the $36,000s.

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U.S. Congressman calls for ‘Broad, bipartisan consensus’ on important issues of digital asset policy

In a letter to the leadership of the United States House Financial Services Committee, ranking member Patrick McHenry took a jab at “inconsistent treatment and jurisdictional uncertainty” inherent in U.S. crypto regulation and called for the Committee to take on its critical issues.McHenry, a Republican representing North Carolina, opened by mentioning that the Committee’s Democrat Chairwoman Maxine Waters is looking to schedule additional hearings addressing matters pertinent to the digital asset industry. He further stressed the need for identifying and prioritizing the key issues and achieving a “broad, bipartisan consensus” on the matters affecting the industry that holds immense promise for the financial system and broader economy.Citing the confusion that the industry faces due to the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission’s (SEC) competing claims for jurisdiction over digital assets, McHenry noted that neither of their positions is grounded in statute. Congress, he maintained, should not hand digital asset regulation over to regulatory agencies or courts, but rather step in to categorize the new asset class and lay down the rules governing it.Furthermore, Congressman McHenry suggested that the Financial Services Committee take a close look at the stablecoin report drafted by the President’s Working Group on Financial Markets (PWG) and examine the Federal Reserve’s position and future steps with regard to a U.S. central bank digital currency (CBDC).In December last year, the U.S. House Financial Services Committee hosted a crypto-focused hearing that featured a strong lineup of industry executives and was widely lauded as a massively productive exchange between policymakers and digital asset stakeholders.

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Russian finance ministry official calls for crypto regulation, not restriction

In surprising comments made by the Russian director for financial policy, Russia could be softening its stance toward crypto. Ivan Chebeskov, a director within the Ministry of Finance, has come out in support of regulating crypto rather than banning it.His support is a response to the Russian central bank proposing a blanket ban on crypto mining and trading.According to Chebeskov, banning cryptocurrency operations and mining will lead to the country lagging behind the worldwide tech industry. The minister instead suggested that cryptocurrencies should be regulated:​​“We need to give these technologies the opportunity to develop. In this regard, the Ministry of Finance is actively involved in the development of legislative initiatives in terms of regulating this market.”The comments were made during the RBC crypto conference, taking place on Tuesday. Chebeskov said that the Russian ministry has prepared a proposal for the regulation of digital assets and is waiting to hear the government’s position on the matter. Prior to working at the Kremlin, Chebeskov enjoyed a productive career employed at Russian and European investment banks. He was a student at the pro-Bitcoin state of Texas and has spoken out in favor of digital currencies in the past. In his view, a digital rouble could compete with the likes of China’s central bank digital currency (CBD. China’s central bank released a pilot version of a digital yuan wallet in early January. Elsewhere, the private sector was also quick to rebuke the proposal, which would ban the issuance, exchange and circulation of cryptocurrencies in Russia. Telegram CEO Pavel Durov, for example, wrote that the proposed ban on crypto would “destroy a number of sectors of the high-tech economy” in a post on his messaging application Telegram. Related: Vibe killers: Here are the countries that moved to outlaw crypto in the past yearIn Russia’s neighboring countries, anti-crypto sentiment is rife. Georgian citizens were made to swear an oath to stop mining crypto, whereas top Bitcoin (BTC) mining country Kazakhstan turned off the internet amid protests. In light of El Salvador’s recent state visit to Moscow, and pro-crypto proponents such as Chebeskov popping up in the Kremlin, Russia may surprise the crypto industry in 2022.

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Indonesian regulator takes cue from Islamic NGOs, bars crypto sales for institutions

Indonesia’s financial watchdog the Otoritas Jasa Keuangan (OJK) warned financial institutions in the country against offering or facilitating crypto-asset sales.On Tuesday, the official Instagram account for OJK posted a warning against the growing number of crypto Ponzi schemes and risks of crypto investments owing to the market’s volatility. The official post also quoted the chairman Wimboh Santoso who said financial institutions are strictly prohibited from offering crypto sale services in any form. The official post read:“OJK has strictly prohibited financial service institutions from using, marketing, and/or facilitating crypto asset trading.”The current warning against crypto investments and prohibition of crypto trading services for financial institutions comes on the heels of several calls for a ban on crypto use from the country’s leading Islamic non-government organizations (NGOs). As Cointelegraph reported earlier, a total of three Islamic organizations have issued a fatwa against crypto use by Muslims, deeming it haram.In October 2021, major Islamic organization the Nahdlatul Ulama deemed crypto haram due to its allegedly speculative nature. A month later, the Indonesian Ulema Council, declared crypto haram as a transactional tool. However, it noted that cryptoassets can be used as an investment tool if they abide by Sharia tenets. Muhammadiyah became the third Indonesian Islamic organization to issue a fatwa against cryptocurrency use as a payment and investment tool.Indonesia over the years has grown to become one of the leading crypto economies in Asia. The total crypto transaction reached 859 trillion rupiahs ($59.83 billion) in 2021, up from 60 trillion rupiahs ($4.18 billion) in 2020. Related: Vibe killers: Here are the countries that moved to outlaw crypto in the past yearCrypto assets are regulated as tradable commodities in Indonesia, governed by the trade ministry and the Commodity Futures Trading Regulatory Agency. The ministry is currently working on setting up an independent market for digital assets called the Digital Futures Exchange, expected to be launched in the first quarter. However, crypto as a form of payment tool is illegal in the country. 

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Law Decoded: When central banks seek public discussion, Jan. 17–24

Last week, two central banks dropped public reports that can have a sizable impact on the crypto landscape in their respective countries and beyond. The U.S. Federal Reserve published a discussion paper entitled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation,” which summarizes years of the Fed’s research on CBDCs. Meanwhile, the Central Bank of Russia released a report that called for a blanket ban on domestic cryptocurrency operations and mining. Both documents are framed as an invitation for public discussion, but the kinds of discussions that they will trigger are likely to be very different.Below is the concise version of the latest “Law Decoded” newsletter. For the full breakdown of policy developments over the last week, register for the full newsletter below.The Fed: Not advancing particular policyThe authors of the Fed’s much-anticipated report make a point to note on several occasions that the paper “is not intended to advance any specific policy outcome.” Indeed, the report gives off a vibe of open-endedness and covers both risks and benefits of a potential U.S. CBDC. Specifically, it acknowledges user privacy concerns that some crypto advocates have previously voiced in the context of the potential digital dollar’s design.On Twitter, crypto-friendly members of the U.S. Senate sounded content with the document’s findings and framing. Senator Cynthia Lummis welcomed the report’s concession that the ultimate fate of the U.S. CBDC project rests with Congress:I’m pleased the Federal Reserve released their long-awaited report on central bank digital currencies this afternoon. Here’s a quick thread of my thoughts.https://t.co/UAJFIPwiqG— Senator Cynthia Lummis (@SenLummis) January 20, 2022Senator Pat Toomey called the paper a constructive contribution to the public discussion around the issuance of a CBDC.Cryptocurrencies, digital assets, and their underlying technologies offer tremendous potential benefits. As such, I’m glad the @federalreserve has constructively contributed to the necessary ongoing public discussion regarding the issuance of a CBDC. https://t.co/10ld3lfXt6— Senator Pat Toomey (@SenToomey) January 20, 2022

CBR: Ban domestic operationsIn contrast to their U.S. counterparts, Russian central bankers are very much advocating for a particular policy. They’ve suggested that investor safety and financial stability risks that cryptocurrencies pose warrant a complete ban of domestic crypto operations and mining activity, as well as introducing punishments for individuals breaching these rules. Notably, the proposed ban specifically concerns the usage of domestic financial infrastructure for crypto transactions, and during a press conference that followed the report’s publication, a Central Bank of Russia official suggested that Russian citizens would still be allowed to engage with crypto using overseas rails.The report is remarkable for making some candid points as to why the ban is needed. For one, the authors recognize that emerging economies, including Russia’s, are more susceptible to the adverse effects of crypto compared to those of developed nations. Furthermore, it states that wide adoption of crypto could undermine Russia’s monetary sovereignty and be at odds with a potential sovereign CBDC that the report passingly praises.Crypto ads: Second phase of regulation?In a series of moves that almost looked coordinated, regulators in the United Kingdom, Spain and Singapore took on cryptocurrency promotions and ads last week. While the first two mainly focused on ensuring appropriate risk disclosures, Singapore opted for a stricter stance of outlawing any and all crypto-related advertisements in public spaces. Binance CEO Changpeng Zhao questioned the capacity of these measures to limit crypto demand because of the prevalence of word-of-mouth marketing in the digital asset space.Such a shift of focus could mark the next step in the evolution of crypto regulation. Jurisdictions that have put comprehensive AML and CFT rules in place are now turning to consumer protection measures as the rapid mainstreaming of digital assets gives rise to marketing strategies that target mass audiences far beyond the tech-savvy core of early crypto adopters.

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Vibe killers: Here are the countries that moved to outlaw crypto in the past year

Last week, Pakistan’s Sindh High Court held a hearing on the legal status of digital currencies that might lead an outright ban of cryptocurrency trading combined with penalties against crypto exchanges. Several days later, the Central Bank of Russia called for a ban on both crypto trading and mining operations. Both countries could join the growing ranks of nations that moved to outlaw digital assets, which already include China, Turkey, Iran and several other jurisdictions.According to a report by the Library of Congress (LOC), there are currently nine jurisdictions that have applied an absolute ban on crypto and 42 with an implicit ban. The authors of the report highlight a worrisome trend: the number of countries banning crypto has more than doubled since 2018. Here are the countries that banned certain cryptocurrency-related activities or announced their intention to do so in 2021 and early 2022.BoliviaThe Bolivian Central Bank (BCB) issued its first crypto prohibition resolution in late 2020, but it was not until Jan. 13, 2022 that the ban was formally ratified. The language of the most recent ban specifically targets “private initiatives related to the use and commercialization of […] cryptoassets.” The regulator justified the move by investor protection considerations. It warned of “potential risks of generating economic losses to the […] holders” and emphasized the need to protect Bolivians from fraud and scams. China Cryptocurrency transactions have been formally banned in the People’s Republic of China since 2019, but it was last year when the government took steps to clamp down on crypto activity in earnest. Several official warnings of the risks associated with crypto investment were followed by a ban on cryptocurrency mining and forbade the nation’s banks to facilitate any operations with digital assets. But the crucial statement came out on Sept. 24, when a concert of the major state regulators vowed to jointly enforce a ban on all crypto transactions and mining. Apart from the common notions of money laundering and investor protection, Chinese officials played the environmental card in their fight with mining, which is a bold move for a country that contributes up to 26% of global carbon dioxide emissions, of which crypto mining represents a marginal share.Indonesia On Nov. 11, 2021, The National Ulema Council of Indonesia (MUI), the nation’s top Islamic scholarly body, proclaimed cryptocurrencies to be haram, or forbidden on religious grounds. MUI’s directions are not legally binding and as such it will not necessarily halt all cryptocurrency trading. However, it could deal a significant blow to the crypto scene of the world’s largest Muslim country and affect future governmental policies. MUI’s determination mirrors a common interpretation that has been shaping up across jurisdictions influenced by the Islamic legal tradition. It views crypto activity as wagering — a concept that arguably could be used to define almost any capitalist activity.On Jan. 20, the religious anti-crypto push was furthered by several other non-governmental Islamic organizations in Indonesia, The Tarjih Council and the Central Executive Tajdid of Muhammadiyah. They confirmed the haram status of cryptocurrencies by issuing a fatwa (a ruling under Islamic law) that focuses on the speculative nature of cryptocurrencies and their lack of capacity to serve as a medium of exchange by Islamic legal standards. Nepal On Sept. 9, 2021, the Nepal Central Bank (Nepal Rastra Bank, NRB) issued a notice with a headline “Cryptocurrency transactions are illegal.” The regulator, referencing the national Foreign Exchange Act of 2019, declared cryptocurrency trading, mining and “encouraging the illegal activities” as punishable by law. NRB separately underlined that the individual users are also to be held responsible for violations related to crypto trading.A statement from Ramu Paudel, the executive director of the Foreign Exchange Management Department of the NRB, emphasized the threat of “swindling” to the general population. Nigeria A U-turn in Nigeria’s national policy on digital assets was cemented on February 12, 2021, when the Nigerian Securities and Exchange Commission announced suspending all plans for crypto regulation, following a ban by the central bank introduced a week earlier. The nation’s central cank ordered commercial banks to shut down all crypto-related accounts and warned of penalties for non-compliance. CBN’s explanation for such a crackdown lists a number of familiar concerns such as price volatility and potential for money laundering and financing of terrorism. At the same time, CBN governor Godwin Emefiele stated that the central bank was still interested in digital currencies, and that the government was exploring various policy scenarios.Turkey On Apr. 20, 2021, the price of Bitcoin (BTC) tumbled 5% after Turkey’s central bank declared that “cryptocurrencies and other such digital assets” could not be legally used to pay for goods and services. As the explanation went, the use of cryptocurrencies could ‘cause non-recoverable losses for the parties to the transactions […] and include elements that may undermine the confidence in methods and instruments used currently in payments’. But that was just the beginning — what followed was a series of arrests of crypto fraud suspects, as well as Turkish president Recep Tayyip Erdoğan personally declaring a war on crypto.Related: Turkish and Salvadoran presidents meet, Bitcoiners left disappointedIn Dec. 2021, Erdoğan announced that the national cryptocurrency regulation had already been drafted and would soon be introduced to the parliament. In a thriller twist, the president remarked that the legislation was designed with the participation of cryptocurrency industry stakeholders. The exact nature of the regulatory framework remains unknown. Russia In a Jan. 20, 2022, report intended for public discussion, the Central Bank of Russia proposed a complete ban on over-the-counter (OTC) cryptocurrency trading, centralized and peer-to-peer crypto exchanges, as well as a ban on crypto mining. The regulator also advanced the idea of imposing punishments for violating these rules. In the justification part of the report, CBR compared crypto assets to Ponzi schemes and listed concerns such as volatility and illegal activity financing, as well as undermining “the environmental agenda of the Russian Federation.” But perhaps the most relevant of the justifications was the concern over the potential threat to Russia’s “financial sovereignty.” How bad is all this?It is hard not to notice that many of the countries on this list represent some of the most vibrant crypto markets: China does not need an introduction; Nigeria was the biggest source of Bitcoin trading volume in Africa; Indonesia was on Binance’s radar as an expansion target; and Turkey saw a rising interest in Bitcoin amidst the lira’s freefall. When crypto awareness and adoption reaches such levels, it is hardly possible to outlaw the technology whose advantages have already become known to the general public. It is also worth a mention that in many cases the authorities’ messaging around crypto has been ambiguous, with officials publicly voicing their interest in digital assets’ potential before and even in the wake of the ban. Caroline Malcolm, head of international policy at blockchain data firm Chainalysis, noted to Cointelegraph that it is important to be clear that “only a very few cases is there in fact a full ban.” Malcolm added that in many casesgovernment authorities have limited the use of crypto for payments, but they are allowed for trading or investment purposes.Why do governments seek crypto bans?Regulators’ motivations to outlaw some or all types of crypto operations can be driven by a variety of considerations, yet some recurring patterns are visible.Kay Khemani, managing director at trading platfrom Spectre.ai, emphasized the degree of political control within the countries that seek to establish crypto bans. Khemani commented: Nations that do engage in outright bans are generally those where the state holds a tighter grip on society and economy. If larger, prominent economies start to embrace and weave decentralized assets within their financial framework, more likely than not, nations who erstwhile banned cryptos may take a second look.States’ major anxiety, often concealed behind the stated concerns for the general population’s financial safety, is the pressure that digital currencies put on sovereign fiat and prospective central bank digital currencies (CBDCs), especially in the shaky economies. As Sebastian Markowsky, chief strategy officer at Bitcoin ATM provider Coinsource, told Cointelegraph:A general pattern suggests that countries with a less stable fiat currency tend to have high crypto adoption rates, and thus end up with bans on crypto, as governments want to keep people invested in fiat […] In China, the wide rollout of the digital yuan CBDC is rumored to be the real reason for the crypto ban. Caroline Malcolm added that drivers behind governments’ crypto policies can shift over time, and therefore it is important not to assume that the positions that these countries take today are going to remain unchanged forever.The hope is that at least in some of the cases reviewed above, strict limiting measures against digital assets will eventually turn out to be a pause that regulators will have taken to create a framework for nuanced, thoughtful regulation.

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Reuters: Binance was withholding information from regulators, repeatedly shunned own compliance department

In a report published on Friday, Reuters laid out the findings of its investigation into the regulatory compliance practices of Binance, the world’s largest cryptocurrency exchange by trading volume.The authors suggest the existence of a recurring pattern whereby the company’s CEO Changpeng Zhao, while proclaiming its openness to government oversight, ran an organization that systematically denied regulators’ requests for financial and corporate structure information and shirked proper client background checks.The reported findings are based on the accounts of Binance’s former senior employees and advisers, as well as the review of documents such as internal correspondence and confidential messages between several national regulators and the company. According to the document, several high-ranking employees have repeatedly raised concerns of weak Know Your Customer/Anti-Money Laundering (KYC/AML) standards at the company but were ignored by the CEO.Additionally, the company reportedly acted against the recommendations of its own compliance department when it continued onboarding new customers from seven countries designated to be of extreme money-laundering risk.The big-picture takeaway that the authors of the report offered is that the described pattern of behavior allowed Binance to maintain ambiguous jurisdictional affiliation and opaque corporate structure while offering financial products that would normally require regulatory approval or licensing in many of its countries of operation.In response to Reuters’ inquiry, the company spokesperson said that the report’s findings were based on outdated or outright incorrect information. Binance CEO Changpeng Zhao later commented via Twitter saying:FUD. Journalists talking to people who were let go from Binance and partners that didn’t work out trying to smear us. We are focused on anti-money laundering, transparent and welcome regulation. Action speaks louder than words. Thank you for your unwavering support! — CZ Binance (@cz_binance) January 21, 2022As Cointelegraph reported, despite ongoing investigations into suspicious activity on its platform in several jurisdictions, Binance continues expanding into new markets, with the most recent move tied to a possible deployment in Thailand.

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Lawmakers explore Bitcoin mining efficiency, broader crypto policy issues during Congress hearing

On Jan. 20, the Oversight and Investigations subcommittee of the U.S. Congress House Energy and Commerce Committee convened a hearing to investigate the environmental effects of cryptocurrency mining. Despite the narrow focus, the conversation that ensued – which many industry experts appraised as a meaningful educational experience for the lawmakers – touched upon a range of blockchain-related issues and themes beyond energy consumption. Here is how it went down, and what comes next.Witnesses set the frameFollowing the opening remarks, the hearing kicked off with the witnesses delivering their testimonies. Bitfury CEO Brian Brooks made a point that it was up to the market to decide on the most productive ways to use the already produced energy and maintained that proof-of-work (PoW) is the consensus mechanism that is best suited to produce true decentralization of a blockchain network.In contrast, Cornell Tech professor Ari Juels, while speaking favorably of blockchain technology and Bitcoin (BTC) in particular, maintained that proof-of-work is unnecessarily wasteful while the downsides of the alternative proof-of-stake, or PoS, mechanisms are largely theoretical.John Belizaire of Soluna Computing stated that Bitcoin’s energy consumption should be seen as a feature rather than a bug because crypto mining can create efficiencies by using the excess renewable energy. Steve Wright, a former general manager of a public utility district in Washington state, shared his experiences of interacting with crypto miners who flocked into the area due to abundance of cheap electricity, while former acting assistant secretary of the U.S. Treasury Gregory Zerzan introduced multiple uses of blockchain technology and said that regulatory uncertainty could hurt its development.Representatives then took to the floor with statements and questions. A few used their time for partisan attacks and political grandstanding, yet most made an honest effort to ask questions that either tackled the energy-related issues at the core of the hearing or sought broader context on the uses and potential applications of blockchain technology.Getting to the bottom of crypto miningCommittee chair Frank Pallone and Oversight Subcommittee chair Diana DeGette interrogated the witnesses on how wasteful crypto mining really is and how to make sure that communities do not bear the costs of energy consumption upticks caused by miners. Congresswoman Jan Schakowsky expressed her concerns about the use of fossil fuels to power mining rigs. Witnesses responded by reassuring the lawmakers of the overall green trend in which the mining industry is evolving, particularly in the U.S.Some Representatives sought to get a better understanding of the efficiencies generated by cryptocurrency mining in order to determine whether they justify the associated energy use. Congresswoman McMorris Rodgers inquired about the larger blockchain industry’s capacity to generate new jobs and protect user data.Florida Representative Neal Dunn showed off some advanced knowledge of Bitcoin economics when he asked Brian Brooks about the relationship between BTC halving and mining efficiency. Dunn also stated that the nation needs to produce more energy anyway, and powering innovative industries such as crypto mining is a good use of this growing capacity.Congressman Morgan Griffith explored the geopolitical aspect of Bitcoin mining, concluding with a supposition that China’s mining ban resulted not so much from energy efficiency concerns but rather from the Chinese government’s dislike of the idea of decentralization. The resulting exchange with Gregory Zerzan resulted in the witness stating that “Bitcoin equals freedom, and there are a lot of places in the world that don’t like freedom.”Industry receptionWhile the hearing did not come across as a massive breakthrough, most industry observers highlighted the educational component of the exchange, as well as its role in moving the policy conversation around crypto mining forward.In an interview with Cointelegraph after the hearing, witness John Belizaire said that the committee members’ readiness to thoroughly explore the complex matter at hand has rendered the discussion productive:”Chairwoman DeGett set the right tone from the very beginning, the tone of ‘we are here to learn.’ Representatives asked good questions and wanted to get educated on these problems.”Belizaire added that he was surprised by some questions related to the possibility of using less environmentally friendly energy sources to power Bitcoin mining in the future, saying that “You have to put it into the context of the global movement taking on climate change.”John Nahas, vice president of business development at Ava Labs, the company behind smart contracts platform Avalanche, noted that the hearing, having started slow, eventually evolved into a “meaningful conversation.” Nahas commented:”It’s clear to me that legislators are seeing the value of blockchains. It was refreshing to see that they understand the numerous areas, like health care records and energy management, that will make our lives more efficient and secure.”John Warren, CEO of U.S.-based Bitcoin mining company GEM Mining, said that the hearing was “an important step in educating U.S. lawmakers on the benefits of the rapidly growing cryptocurrency industry, and mining in particular.”Consonant with Belizaire’s testimony and some of the Representatives’ comments, Warren believes that the migration of mining activity into the U.S. is a favorable scenario in terms of reducing the industry’s environmental impact:”Greater oversight in America, coupled with ongoing innovation, will ensure U.S. companies lead the way in taking steps to operate as efficiently as possible and thereby further reduce mining’s environmental impacts.”Policy implicationsWhile nothing about this hearing was particularly groundbreaking, the effects of such interactions between Congress and the industry tend to compound. It is consequential that over time, elected officials across a varied set of specialized committees – and not only those engaged in financial oversight – get exposure to pro-blockchain industry rhetoric and arguments.In the near-term, however, this interaction shouldn’t be expected to result in any specific legislation.Ava Labs’ Nahas commented:”This was mostly informational and the early stages of any policy process. However, policymakers should continue to engage with experts and objective resources to better understand emerging blockchains and their ability to secure billions of dollars in value while consuming just a small fraction of proof-of-work chains.”Still, the arguments that were raised around decentralization, the dangers of overregulating the crypto space, and various efficiencies that blockchain technology can engender will stick with at least some of those who participated in the hearing, adding to their long-term policy vision.

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Binance US officially launches trading services in Connecticut

United States cryptocurrency exchange Binance US, which operates separately from the global Binance platform, has officially opened its trading services to residents of Connecticut. Beginning Jan. 20, Connecticut residents can register to buy, sell and trade digital assets such as Bitcoin (BTC) and Ether (ETH) on the Binance US platform, the company announced Thursday. Residents will also have access to the Binance US mobile app on Android and Apple devices. Binance US launched in 2019 to provide regulated crypto trading services to residents of the United States. Currently, the trading platform is approved to operate in 44 U.S. states and intends to secure approvals across all 50 states and territories. Binance US CEO Brian Shroder said his firm’s expansion reflects the growing demand for digital assets in the country. A new survey of Americans conducted by crypto platform Voyager Digital seems to corroborate that view. According to the survey, nearly two-thirds, or 61%, of Americans may purchase digital assets this year. Fifty percent of the survey participants said they would invest more in cryptocurrencies if they understood the asset class better. Related: Crypto mainstream adoption: Is it here already? Experts answer, Part 3Meanwhile, separate data from Arcane Research shows that the United States is dominating the Bitcoin trading arena. So far this year, U.S. trading hours account for 43% of Bitcoin’s average 24-hour trading volumes.Binance US wants to go public on the US stock market. Amid a myriad of regulatory concerns across the globe, is this a good idea for the brand? https://t.co/sREkorqjUh— Cointelegraph (@Cointelegraph) July 25, 2021As Cointelegraph reported, Binance US is eyeing a “mega funding” deal through an initial public offering. Binance CEO Changpeng Zhao expressed confidence in the U.S. firm’s ability to raise the funds even after investors reportedly backed out a similar initiative last summer over regulatory concerns.

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Canadian Bitcoin platform Shakepay raises $35M in Series A funding

It’s another shake-up for the finance industry as Montreal-based Bitcoin (BTC) startup Shakepay raised $35 million from investors. The fresh funding from the United States-based venture capital firm QED Investors values the company at $251 million. Founded in 2015, Shakepay allows Canadians to buy and sell BTC and pay their friends. It also supports the purchase of Ether (ETH).The startup aims to use the funds to consolidate growth, focus on bringing on additional products to market such as the recently launched Shakepay Visa Prepaid Card, and expand the team. Speaking to Cointelegraph, ShakePay CEO Jean Amiouny said: Shakepay’s seen demand boom for adopting Bitcoin and we’re really excited about this raise to be able to offer more Bitcoin products to our fellow Canadians.”The funding supports a swathe of encouraging stats for 2021. The company surpassed $6 billion in total volume reaching more than 900,000 customers last year. According to the Shakepay blog, the company reached 1% of Canada’s population, or 380,000 people, in March last year and 2% of the population in November. The company grew its userbase by 381% in 2021. Canada is increasingly becoming pro-Bitcoin. A recent survey showed that 62% of Canadians want to get paid in crypto by 2027, while a Bitcoin ETF launched in Canada late last year. For Shakepay, it’s all about retail adoption, as the group seeks to make “it easy for Canadians to buy and earn the soundest money to ever exist: Bitcoin.”Related: Canadian restaurant chain reports earning 300% gains on BTC investment to weather pandemicJean Amiouny illustrated the company’s vision in the official announcement:With our Series A funding, Shakepay is excited to welcome QED Investors, who have deep experience in the financial technology industry, and who will support the continued growth of Shakepay’s vision to be a leader in financial applications that help Canadians achieve financial wealth through investing in bitcoin.”

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BIS general manager: Central banks generate trust, not big techs or “anonymous ledgers”

In a speech entitled “Digital currencies and the soul of money,” Agustín Carstens, the general manager of the Bank of International Settlements, criticized private stablecoins and decentralized finance (DeFi), touting central bank-led financial innovation as the best possible path to the future of money.Carstens, who served as governor of the Bank of Mexico between 2010 and 2017, delivered his remarks at the conference on “Data, Digitalization, the New Finance and Central Bank Digital Currencies: The Future of Banking and Money” at the Goethe University in Frankfurt.The economist’s argument revolved around the institutional foundations of money and how, even in the digital age, central banks remain in a position to provide trust in money and ensure “an efficient and inclusive financial system to the benefit of all.” Alternative designs of monetary systems that emerged throughout history, according to the BIS’ top official, “have often ended badly.”To advance his point, Carstens discussed three plausible scenarios of financial innovation. In addition to the global monetary system led by central banks, he envisioned a world where big tech-powered stablecoins are the dominant form of money, and another where the bulk of financial activity is decentralized and runs on distributed ledgers.The stablecoin scenario, Carstens maintained, is fraught with market power and data concentration at the hands of a few dominant private money issuers. National and global monetary systems would become fragmented, while the disintermediation of incumbent banks would threaten financial stability.Speaking of DeFi, the BIS boss claimed that the reality that DeFi applications are delivering is at odds with their proclaimed foundational principles of disintermediation. Carstens said:”To date, the DeFi space has been used primarily for speculative activities. Users invest, borrow and trade crypto assets in a largely unregulated environment. The absence of controls such as Know Your Customer (KYC) and Anti-Money Laundering rules, might well be one important factor in DeFi’s growth.”Furthermore, echoing BIS researchers’ recent claims, Carstens stated that “there is a lot of centralization in DeFi.” He also cited scalability issues and liquidity mismatches as problematic aspects of decentralized finance.In the vision of the monetary future that the economist extolled, central banks are at the core of the financial system, facilitating innovation such as building a global network of CBDCs. Because they are not profit-driven, central banks would act to advance the interests of the public, according to Carstens.These statements come as no surprise when voiced by a chief officer of an institution that is often called a bank for central banks. As Cointelegraph reported earlier, the BIS’ innovation arm is actively engaged in several CBDC trials, including the cross-border settlement initiative ran jointly by central banks of France and Switzerland.

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EU securities regulator calls for proof-of-work crypto mining ban

Erik Thedéen, the vice-chair of the European Securities and Markets Authority has raised concerns over the growing use of renewable energy for Bitcoin mining.In a recent interview with the Financial Times, Thedéen said that Bitcoin (BTC) mining has become a “national issue” and warned cryptocurrencies could pose a risk to climate change goals. He called upon European regulators to take special exception to proof-of-work mining which is primarily used by Bitcoin and a few other forked altcoins. He also advocated for proof-of-stake as a better, energy-efficient alternative:“We need to have a discussion about shifting the industry to a more efficient technology.”Melanion Capital, a Paris-based alternative investment firm, has addressed the growing call for a ban on PoW mining back in November 2021, called it “completely misinformed”The investment firm said that due to the decentralized nature of Bitcoin, there is no lobby or group to defend its interests, which “should not be taken as an opportunity to implement measures rendering illegal an industry for its lack of defensive powers.”Related: Swedish call to ban crypto mining ‘completely misinformed,’ says fund managerThe Bitcoin network’s energy usage was one of the most controversial topics in 2021 that saw the likes of Elon Musk, Jack Dorsey and Michael Saylor engage in several debates. Tesla even discontinued the Bitcoin payment option citing the Bitcoin network’s energy usage. However, unlike Thedéen, most of the critics until now had no issue with clean energy usage. Musk has claimed that if 50% of the Bitcoin network’s energy comes from renewable sources, Tesla would rethink adding a Bitcoin payment option.China’s Bitcoin mining ban in May last year turned out to be a boon for the ecosystem, as it not only disintegrated the highly centralized Bitcoin mining industry, it also helped in moving towards renewable energy usage. According to the Q3 report from Bitcoin Mining Council, renewable energy usage by the Bitcoin network reached 58% by the third quarter of 2021.Global Sustainable Energy Index Source: BMC Report

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