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Tech Experts Urge Regulators to be Sceptical on Digital Currencies Innovation

by Blockchain NewsJune 2, 2022

A group of technology innovators has sent a letter to the United States Congressional Leadership, Committee Chairs, and Ranking Members, urging them to take a critical look at cryptocurrency innovations.

These experts, numbering 26 in total, including Harvard lecturer Bruce Schneier, former Microsoft engineer Miguel de Icaza and principal engineer at Google Cloud, Kelsey Hightower admonished the lawmakers not to listen to stakeholders with a vested interest in the crypto industry who claims the technology is designed for the good of all.

“We write to you urging you to take a critical, sceptical approach toward industry claims that crypto-assets (sometimes called cryptocurrencies, crypto tokens, or web3) are an innovative technology that is unreservedly good,” the letter reads, adding, “We urge you to resist pressure from digital asset industry financiers, lobbyists, and boosters to create a regulatory safe haven for these risky, flawed, and unproven digital financial instruments and to instead take an approach that protects the public interest and ensures technology is deployed in genuine service to the needs of ordinary citizens.”

These experts argued that not everything that can be built should be built and that the history of technology is replete with innovations that started out good but turned out bad in the end. They said the technology is not as novel as the proponents claim they are, adding that the only group of protocols, privacy coins, which offer true anonymity, are a disaster in that they are the right haven for money launderers.

They believe the clamour around blockchain technology is not also worth it in that it promotes only very few real-world use cases.

Drawing on all these points, experts implored the lawmakers tasked with formulating regulations that bind the crypto ecosystem to “take a truly responsible approach to technological innovation and ensure that individuals in the US and elsewhere are not left vulnerable to predatory finance, fraud, and systemic economic risks in the name of technological potential which does not exist.”

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Tech Experts Press Regulators to be Sceptical on Digital Currencies

by Blockchain NewsJune 2, 2022

They believe the clamour around blockchain technology is not also worth it in that it promotes only very few real-world use cases.

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Tagged : Congress / Cryptocurrency / Industry / TECH / Us

Crypto Market Cap Clashes over 50% to around $1.4T

by Blockchain NewsMay 10, 2022

The market capitalisation of cryptocurrencies has fallen more than 50% to around $1.4 trillion as the Federal Reserve (Fed) raised interest rates by 50 basis points sparking a sell-off panic among investors.

Bitcoin (BTC) tumbled to a three-month low in the Asian trading section on Monday.

BTC is at its lowest level since July 2021, with a daily low of more than 12%, down more than 56% from its all-time high of around $69,000 in November last year.

The market capitalisation of the top 500 digital assets has fallen more than 50% to $1.4tillion from a record peak in November 2021.

Data from CoinMarketCap also showed that the current cryptocurrency Market Cap is $1,406,774,855,869.

Bitcoin’s correlation with the Nasdaq Composite, a gauge of large U.S. tech companies, has reached record highs, according to data provider Kaiko.

Daniel Ives, strategist at Wedbush Securities said that:

“This is a risk off across all asset classes including crypto.”

Related-listed stocks of cryptocurrency companies on U.S. exchanges were also hit by a slump. MicroStrategy, the largest Bitcoin holding public company led by Michael Saylor, has fallen 55% this year. Likewise, U.S.-listed cryptocurrency exchange Coinbase has dropped 65% in 2022, falling below $100 for the first time.

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Tagged : Bitcoin / Blockchain / Capitalisation / Crypto / Market Update / Us

US Lawmakers Introduce ‘ECASH Bill’ Aimed at Creating Digital Dollar

by Blockchain NewsMarch 29, 2022

A group of U.S. lawmakers announced Monday that they introduced a law bill that calls for developing an electronic version of the U.S. dollar that has the same privacy expectations and legal status as fiat currency.

Supported by serval lawmakers, including Stephen Lynch (D-Mass.), Jesús Chuy Garcia (D-Ill.), Ayanna Pressley (D-Mass.) and Rashida Tlaib (D-Mich.), the bill titled ‘Electronic Currency and Secure Hardware (ECASH) Act,’ would direct the Treasury Department to develop and issue a digital dollar.

The e-cash would be used directly by the general public via widely available hardware devices without the necessary involvement of third-party payment processing or custodial intermediaries. As defined in the draft bill, the electronic dollar would be a bearer instrument that enables people to hold onto their phone or a card. It would be a token-based system, not account-based. If someone were to lose their card or phone in an account-based system, they would lose the funds.

The e-cash would also support peer-to-peer (P2P) transactions and support fully anonymous transactions. Users wouldn’t be subject to any more severe know-your-customer rules. They would access the e-cash dollars via a bank account, P2P transaction or a store, and do whatever they liked with it.

Rohan Grey, assistant professor of law at Willamette University, who provided advice on the drafting of the bill, said unlike other digital dollar proposals, the e-cash would not be issued by the U.S. Federal Reserve and therefore would not be a CBDC. He further stated that the e-cash would not involve any form of distributed ledger, blockchain, or other intermediated account.

“We’re proposing to have a genuine cash-like bearer instrument, a token-based system that doesn’t have either a centralized ledger or distributed ledger because it had no ledger whatsoever. It uses secured hardware software and it’s issued by the Treasury. The e-cash would be purely P2P, capable of offline transactions, and able to be held and used completely anonymously like physical cash is today,” Grey elaborated.

Grey added that the system could help serve people who are unable to hold bank accounts because of minimum balance requirements or those who don’t trust banks because banks may freeze accounts or charge fees.

The Digital-Dollar Dilemma

The global currency market is facing digital disruption. Consumers across the globe are adopting crypto coins, ushering in a more decentralized era in global finance. Governments are taking notice and are moving to develop central bank digital currencies (CBDCs).

The U.S. is facing a classic “innovator’s dilemma” in which it is expected to respond to an insurgent innovator that threatens its dominant position in leading the adoption of an increasingly digital financial system.

Early this month, The Biden administration began to address this issue by signing a recent executive order that directed U.S. government agencies to prioritize the development of policies to regulate digital assets and examine the feasibility and requirements of launching a digital dollar.

On March 10, President Biden issued an executive order that called for the responsible development of digital assets. It focuses on the development of cryptocurrencies, stablecoin, and CBDC. The executive order embraces digital asset innovation and signalled the end of regulatory uncertainty surrounding such digital assets. The order also encourages a whole government approach and inter-agency coordination in the research and development of a CBDC.

In January, The Federal Reserve released a discussion paper that examined the pros and cons of creating a CBDC for the U.S. The paper invites public comments and says that the Fed will not favour any particular policy outcome. The regulator disclosed that the paper is an initial step in determining whether and how a CBDC could enhance the domestic payments system while keeping it effective and safe. As previously mentioned, the Fed is accepting comments in response to the Paper until May 20, 2022.

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Tagged : Congress / Digital Dollar / ECASH.BILL / Regulation / Us

Nayib Bukele Criticises U.S. Does Not “Stand for Freedom”, the Senate Comm Passes ACES Bill

by Blockchain NewsMarch 25, 2022

El Salvador President Nayib Bukele has lashed out at the United States Government after the Senate Foreign Relations Committee passed the Accountability for Cryptocurrency in El Salvador Act (ACES) Bill, which is now slated to head to the full house for voting.

The ACES Bill seeks to monitor how El Salvador implements its Bitcoin law which grants the digital currency a legal status alongside the United States Dollar.

The bill will grant relevant U.S. agencies the right to monitor the impact of BTC as a legal tender on the country’s macroeconomic stability and public finances. It will also assess the role of Bitcoin in the rule of law in the country and its democratic governance. While the date of voting in the bigger house has not been announced, the bill grants the agencies the right to peek into the most salient aspects of monetary governance, including whether the country is adhering to relevant anti-money laundering rules.

Lamenting on Twitter, Nayib Bukele said he never dreamt of a time when the U.S. government would be scared of the work that is being done in the Central American nation. Bukele said the U.S. government does not support freedom as is popularly being said of the North American nation.

“The U.S. Government DOES NOT stand for freedom, which is a proven fact. So we will stand for freedom. Game on!” Bukele said in a tweet.

El Salvador’s adoption of Bitcoin as a legal tender has always met with resistance from prominent intergovernmental organizations. While the International Monetary Fund (IMF) and the World Bank are amongst those who have expressed pessimism concerning the country’s Bitcoin adoption move, the likely passage of the ACES Bill by the U.S. Senate has formed a more unsettling struggle for the El Salvadoran president.

Either way, things play out, Bukele is still arguably committed to Bitcoin’s financial freedom.

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Tagged : ACES / El Salvador / NAYIB BUKELE / Politics / Senate / Us

U.S. Democrats Propose Bill to Restrict Russian Crypto Use amid Ukraine Crisis

by Blockchain NewsMarch 18, 2022

U.S. Democratic senators introduced a bill to the U.S. President Thursday that they propose to impose sanctions on foreign cryptocurrency companies with business to Russian entities, preventing them away from transacting with U.S. customers, Reuters reported.

The digital asset sanctions proposal was led by Senator Elizabeth Warren and co-sponsored by 10 Democrats including Senators Mark Warner and Jon Tester.

Warren wrote in a statement that：

“Russian President Vladimir Putin and his cronies can move, store and hide their wealth using cryptocurrencies, potentially allowing them to evade the historic economic sanctions the U.S. and its partners across the world have levied in response to Russia’s war against Ukraine,”

But other counterparts disagreed, arguing that the cryptocurrency market lacks liquidity for large-scale transactions, and therefore said Russia cannot evade sanctions entirely through cryptocurrencies.

The bill also involves wanting the Treasury Department to block digital asset exchanges operating in the United States from trading with any Russian crypto users. However, Most exchanges comply with the above-mentioned sanctions but refuse to ban the trading of Russian accounts on a large scale.

U.S.-based Coinbase said it would not “completely ban all Coinbase transactions involving Russian [crypto wallet] addresses.” Bahamas-based FTX also said it would not impose a ban on Russia, but pledged to comply with sanctions on individuals.

Among other things, the bill would require the Treasury Department to publicly identify foreign crypto exchanges deemed high risk of evading sanctions and money laundering, requesting U.S. taxpayers to report any offshore crypto transactions over $10,000.

On Wednesday, amid the ongoing war on its shores, President Volodymyr Zelenskyy has signed into law the bill that will legalize digital currencies in Ukraine. The new law helps in creating conditions for the launch of a legal market for virtual assets in the country.

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Tagged : Bitcoin / Blockchain / Crypto / Exchange / Politics / Russia / Trading / Us

Crypto Exchange Anchex Raises $1M to Expand Customer Base

by Blockchain NewsMarch 18, 2022

U.S.-based cryptocurrency exchange Anchex has raised its largest-ever investment of up to $1 million to expand the customer market.

According to Dylan Thompson, the funds raised will be used to expand into new markets in the U.S. and India.

Dylan Thompson said that since the company is still in the early stages, he hopes to work with regulators and added that:

“In the immediate term, Nigeria, Ghana, Kenya, Botswana, Zambia, and, of course, India are the nations we want to focus our expansion efforts on.”

The raise took three months, and the company is now valued at $5 million, a tenfold increase since July 2021.

Since its inception in 2020, Anchex has processed over $7.5 million in transaction volume and today serves over 250,000 individual consumers and 500 institutional clients from around the world.

“We can provide institutions with a white-label solution that is supported by liquidity, security, sub-accounts, and ledgers – everything you’d need for a full-service crypto market entry.”

The startup was founded in 2020 by Dylan Thompson, a former member of the RAND Merchant Bank blockchain team.

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Tagged : ANCHEX / Bitcoin / Blockchain / Crypto / Exchange / Finance / Us

US Labor Department Urges Caution over Crypto Investment in 401k Retirement Plans

by Blockchain NewsMarch 14, 2022

The U.S. Department of Labor (DOL) on Friday warned employers and retirement plan providers to “exercise extreme care” before they consider cryptocurrency into their investment option for plan participants.

The labor agency made such comments as part of its efforts focused on protecting the retirement savings of U.S. workers.

The DOL said that cryptocurrencies like Bitcoin and other digital assets such as non-fungible tokens, pose significant challenges and risks to 401(k) investors, including, financial loss, theft, and fraud.

The Labor Department disclosed that financial services companies have started marketing crypto investments to 401(k) plans as retirement-plan option in recent months.

The labor agency warned that employers who add crypto investments to their company 401(k) plans might easily go against their legal obligations to plan participants.

Ali Khawar, acting assistant secretary at the Employee Benefits Security Administration, talked about the development and said: “At this early-stage in the history of cryptocurrencies … the U.S. Department of Labor has serious concerns about plans’ decisions to expose participants to direct investments in cryptocurrencies or related products, such as NFTs, coins and crypto-assets.”

Investing in Cryptocurrency

In September last year, the U.S. Department of Labor started working on guidance related to cryptocurrency. But the latest move by the DOL shows that the agency has followed the footsteps of other U.S. federal regulators that have recently highlighted risks that cryptocurrencies present to investors. The U.S. Securities and Exchange Commission (SEC) has a regulatory focus on investor risks related to cryptocurrencies.

Although the current law does not prohibit investing cryptocurrencies in 401(k) plans, many labor lawsuits (including a recent wave) have challenged the structure of the plan investment lineup, resulting in several plan sponsors favouring safer and less exotic and or volatile investments.

There has been pressure on retirement plan providers to favor stable, transparent, and low-cost investments such as index funds to avoid potential litigation. Recent lawsuits have examined how the Employee Retirement Income Security Act of 1974 (ERISA) regulates alternative investments like private equity or hedge funds.

Investing in cryptocurrency and crypto funds—which are much less stable or transparent than mutual funds—may still be far away from the investment universe of an ERISA plan.

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Tagged : 401(K) / Crypto Investment / Cryptoeconomics / DOL / LABOR / Retirement / Us

US President Joe Biden to Sign Executive Order on Crypto this Week

by Blockchain NewsMarch 9, 2022

According to several people familiar with the White House’s deliberations, U.S. President Joe Biden is expected to issue an executive order on cryptocurrency this week. The move will mark the first step toward regulating how crypto assets are traded.

The action by the White House comes as, in recent weeks, U.S. administration officials have raised concerns about Russia’s use of crypto assets to evade the impact of sanctions in response to its invasion of Ukraine. The sanctions have closed the country’s stock market and sent the ruble to historic lows.

Two people familiar with the process have disclosed that the executive order on cryptocurrency is expected to be issued this week. The order will describe what government agencies, including the Treasury Department, should do to create policies and regulations on digital currencies. It is also expected to develop policies to enable the U.S. government to work with foreign powers to regulate crypto and its trade across international borders.

Furthermore, the order will ask other agencies, including the Financial Stability Oversight Council the Treasury Department, among others, to analyze the use of cryptocurrency in financial crimes and its impact on the environment.

Besides that, the order will also direct agencies to build on efforts by the Federal Reserve to study the possibility of launching a new central bank digital currency.

In January, the Federal Reserve issued a report that discussed the risks and benefits of U.S.-backed digital currency.

U.S. officials have remained concerned about Russia’s ability to use cryptocurrency to evade sanctions. Crypto is one of several spaces that the Biden administration is looking to beef up as it attempts to ensure that sanctions on Russia have maximum impact.

The order appears neutral on the issues of cryptocurrencies as a whole. It hints that the U.S. will not go in the direction of banning the use of technology. In the recent past, as reported by Blockchain.News. Several countries, including China, issued a complete ban on cryptocurrency within their jurisdictions.

The implication in the order is that cryptocurrency will remain a part of the U.S.U.S.nomy for years to come. The order signals that regulations are underway. It means that significant changes are on the way to how the U.S.U.S.overnment handles a technology that has until now seen its development majorly driven by private businesses.

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Tagged : Cryptocurrency / Executive Order / Joebiden / Politics / Russia / Sanction / Us / WHITE HOUSE

Virginia Senate Votes to Support New Bill by Permitting Banks to Offer Crypto Custody Services

by Blockchain NewsMarch 7, 2022

With just a signature away, banks operating in the United States of Virginia will soon be able to offer cryptocurrency custody services.

Based on the unanimous vote from the Virginia Senate, the proposed bill amendment introduced on January 22 this year by Delegate Christopher T. Head sought to allow eligible banks to offer cryptocurrency custody services.

The House Bill No. 263 reads:

“A bank may provide its customers with virtual currency custody services so long as the bank has 26 adequate protocols in place to effectively manage risks and comply with applicable laws.”

In tandem with a growing trend amongst key states in America to integrate digital assets into their economic operations, the Virginia lawmakers passed the proposed amendment 39:0. Following the passage of the Bill, Virginia Governor Glenn Youngkin is expected to sign to bill to make it a law in the United States.

Should the bill be signed into law, banks willing to offer crypto custody services will have to fulfil three basic requirements: the implementation of effective risk management systems, the possession of adequate insurance coverage, and the launch of an oversight program to address associated risks with cryptocurrencies.

Additionally, bank customers will be required to have full control of the private and public keys linked to their digital assets under custody.

“Acting in a fiduciary capacity, the bank shall require customers to transfer their virtual currencies to the control of the bank by creating new private keys to be held by the bank.”

Different states in the U.S. are integrating cryptocurrencies in different ways. Colorado is ramping up plans to start accepting Bitcoin and other altcoins as payment for tax and fees in the state as early as this summer. With more states beginning to realize the inherent value in digital currencies, it will not be surprising to see more states or cities announce their own unique ways of embracing these nascent asset classes.

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Tagged : Cryptocurrency / Custody / Regulation / Us / VIRGINIA