After Terra, Celsius’s Collapse - Let’s Talk Contagion and Regulation, Bipartisan Bill to Regulate Crypto in the US, UK moving forward with its plan to become world crypto hub…
June 2022 Newsletter
Once a month our team summarizes here the market movements and what we have been following for our client and ourselves. We have hand-selected what we believe to be must-reads of this month to ensure you are all caught up on the most recent developments. Articles are grouped per region to facilitate your pick based on interest. As per usual, we begin with our special topic of the month: After Terra, Celsius’s Collapse - Let’s Talk Contagion and Regulation.
After Terra, Celsius’ Collapse - Let’s Talk Contagion and Regulation
Last month, Terra, then one of the largest stablecoins by market cap, lost its peg and destabilized the crypto market, bringing extra attention to a cryptocurrency class that was already on the radar of regulators (See May Newsletter and stay tuned for our upcoming Thought Leadership on Stablecoins: A Balancing Act between Regulation and Innovation). This month, Celsius - a leader in the high-yield crypto-lending space - collapsed, along with Babel, another crypto-lender, bringing increased scrutiny from both regulators and investors as the price of Bitcoin dropped below $19,000 for the first time since December 2020. Last month’s European Central Bank’s Report on Decrypting financial stability risks in crypto-asset markets (see May Newsletter) had already outlined some of the risks associated with DeFi lending and other crypto, financial-like types of products. The Security Exchange Commission (SEC) in the US, which had already voiced concerns in the past, stated it is working closely with exchanges and lenders for better investor protection.
Yet, the events of the last couple months certainly remind us of past crises and history, and the need for regulation. After the mortgage-backed securities financial crisis of 2008-2009 came the third Basel accord - Basel III - a “framework that sets international standards for bank capital adequacy, stress testing, and liquidity requirements”, “intended to strengthen bank capital requirements by increasing minimum capital requirements, holdings of high quality liquid assets, and decreasing bank leverage.” (wikipedia).
While regulating the crypto market shouldn’t come at the expense of innovation and competition, this increased interest from regulators is an acknowledgement of the relevance and of the potential of digital assets to transform the flawed, though “functional” financial systems - at least for developed countries. The point is, if it looks like an apple, smells like an apple (i.e. risk-alike), it should be regulated like an apple…but not banned. A principle that seems to reflect how regulators in Canada tend to approach cryptocurrencies and its products and the United Kingdom’s position of the last few months.
Crypto lender Celsius pauses withdrawals due to ‘extreme market conditions’
[CNBC]
On June 13th, the crypto exchange Celsius, paused all user activities including withdrawals, swaps and other transactions between users. The main reason for this pause was due to the extreme market conditions, particularly the crypto market that saw its value drop from $1,781 billion in Feb 2022 to $1,234 billion in June 2022 - particularly driven by its most important cryptocurrencies - Bitcoin and Ether. As of May 2022, the firm had more than $8 billion lent out to customers, and close to $12 billion in assets under management. Celsius offered very attractive, high-yield lending products, of almost 18% for certain crypto tokens.
The Caisse de Dépôts et de Placements du Québec (CDPQ), Canada’s second largest pension fund, had invested nearly $200 million in Celsius last October. Following the events, CDPQ only mentioned that the company was following the file very closely…
Meanwhile, even though investors’ confidence in getting back their crypto is low, the Wall Street Firm, Goldman Sachs, announced it was seeking $2 billion in commitments from investors to potentially buy the assets of Celsius in the case it went bankrupt. And five state regulators have opened investigations regarding Celsius’ activities.
https://www.cnbc.com/2022/06/13/crypto-lender-celsius-pauses-withdrawals-bitcoin-slides.html
https://www.coindesk.com/business/2022/06/24/goldman-sachs-raising-funds-to-buy-celsius-assets-sources/
Blockchain reaction: Three mechanisms for crypto contagion
[The Economist]
Source: The Economist
As the price of bitcoin reached a low of $17,600 on June 18th, over $1 billion was liquidated as traders failed to post more collateral. Following crypto-lender Celsius, Babel Finance also paused withdrawals, while others reduced their balance sheets. Crypto exchanges were also hit. As the Economist puts it, “As prices have fallen, cracks have appeared in the crypto infrastructure.” Another way of saying the weaknesses of the crypto infrastructure were exposed… In this article, the Economist highlights how fuzzy valuations, “incestuous relationships” that lead to contagion and the lack of a liquidity backstop can amplify “trouble.”
Starting with the latter, contrary to conventional finance, the crypto ecosystem lacks fail-safes to reduce the risk of panic-selling when prices fall as they have. There are no regulators, no institution to stop the bleeding or bail-out important players. Lenders are not insured.
Moreover, there is a lack of “established valuation models” for valuing crypto products such as derivatives and tokens from DeFi platforms. Combined with the fact that investors mostly lack understanding of digital assets (see May newsletter) and underlying risks and the high degree of interconnectedness between DeFi platform, the trust in the price of these assets is shaky at best, such that when the price of one asset falls, it trickles down through the system. While the contagion effect was well observed with the Stablecoins market last month, which necessarily had impacts on Celsius’ operations, Celsius illustrates further the liquidity issue and high risk of certain products. To achieve the 18% yields mentioned above, Celsius “made loans to marketmakers, hedge funds and DeFi projects when price sank, however, so did the value of those assets” - including the $400 million in staked Ether, an illiquid derivative product - which led to Celsius being unable to fulfill the growing withdrawal requests and freeze funds.
One thing the Economist doesn’t discuss in this interesting article though is the interconnectedness, not only amongst the crypto market, but with traditional markets, which have also suffered lately and affected investor risk aversion.
https://www.economist.com/finance-and-economics/2022/06/23/three-mechanisms-for-crypto-contagion
https://www.coindesk.com/business/2022/06/29/three-arrows-capital-liquidation-ordered-in-british-virgin-isles-report/
SEC's Gensler says there's a regulatory path forward for crypto lenders
[CoinDesk]
In reaction to Celsius and others freezing accounts (withdrawals and deposits) and amid an increased market volatility, the US Securities and Exchange Commission (SEC) chairman Gensler stated it was evaluating the various product offerings provided by crypto lenders and firms in a bid to identify the products that could potentially fall under securities offerings and would require regulation.
He noted that the SEC is mainly concerned about the fact that many lenders offer products promising over 15% returns per annum but without fully disclosing what stands behind the ability to realize those returns. The SEC, as other regulators, had already expressed its concerns regarding high-risk crypto-products, many of which have key attributes of securities and would thus need to be registered.
Yet, the tone remains optimistic. Rather than banning, the SEC is looking to work with the exchanges and lenders to ensure compliance and registration in order to protect investor assets.
https://www.theblock.co/post/152058/secs-gensler-says-theres-a-regulatory-path-forward-for-crypto-lenders
REGION: NORTH AMERICA
US SEC Asks Companies to Account for Risks Related to Crypto Holdings in New Guidelines
[Thelocalreport.in]
US-listed companies that act as custodians of cryptocurrencies on behalf of their users should account for those assets as liabilities and warn investors about the associated risk, the US Securities and Exchange Commission (SEC) has said in a newly published staff accounting bulletin. The new guidance which aims to particularly highlight the potential risks of crypto-related investments to customers will apply to traditional firms such as banks or retail brokers that custody cryptocurrencies for their clients or provide other related services, as well as to crypto exchanges. Earlier this year, Gary Gensler – the current SEC Chairman – opined that US federal regulators should directly oversee crypto exchanges. According to him, such an initiative should take place in 2022 to grant investors stronger protection when dealing with cryptocurrencies. Considering the risks involved in cryptocurrencies, regulators enforcing companies to disclose may provide investors with relevant information to later make informed decisions regarding their assets after considering such risks. While similar regulations do not seem to be enforced in Europe or Canada, at least not in such explicit terms, Australia has been investigating the regulation of custodians. Considering the growing number of crypto firms, investors may benefit from similar types of regulations.
https://www.thelocalreport.in/us-sec-asks-companies-to-account-for-risks-related-to-crypto-holdings-in-new-guidelines/
US SEC Uncovers Money Laundering Scheme from Do Kwon
[Coin speaker]
Do Kwon, the Chief Executive Officer of Terraform Labs, might be in more legal trouble as the United States Securities and Exchange Commission (SEC) has uncovered a money-laundering scheme linked to him. Hints about the money laundering scheme were given by some of Terraform Labs employees who were interviewed by the regulator remotely. The employees confirmed that Do Kwon transferred as much as $80 million (100 billion won) monthly to external wallets. The funds according to the sources were spread out to dozens of wallets and were conducted months before the eventual collapse of the UST algorithmic stablecoin and Luna Classic (LUNC) tokens. Such money laundering claims are only out after the crash of Luna and it is not known as to how long this scheme was in place. Regulators could study this case, and design potential regulatory measures to prevent similar money laundering schemes from happening. In the US, following the Executive Order of the President’s office, the Secretary of Treasury will be preparing a framework for such Anti Money Laundering (AML) monitoring measures. Moreover, this opens up an opportunity for the regulators globally to collaborate on digital asset related Know Your Customer (KYC) and AML monitoring regulatory measures.
https://www.coinspeaker.com/us-sec-money-laundering-do-kwon/
Ontario Securities Commission Slaps Bybit and KuCoin With Penalties
[CoinDesk]
The Ontario Securities Commission (OSC), a regulatory body in the province of Ontario, has fined two major crypto exchanges, KuCoin and ByBit, for selling unregistered securities to Ontario residents. ByBit signed an agreement with the OSC, which as part of the agreement, paid nearly C$2.5 millions in fine, but also agreed with the regulator to work with them to properly register as an exchange. However, on the KuCoin side, the entity is accused of being uncooperative with the OSC, and as a consequence KuCoin is permanently banned from conducting business in the Ontario market. Recall that last year, Binance was also banned from operating in Ontario, and still is. Its Canadian CEO, Lawrence Truong, has however stated in an interview that it hopes to obtain regulatory approval and be able to service Ontario users by 2024. Canadians would be migrated to a separate and more limited platform, similarly to how it operates in the US.
The fact that the OSC decided to ban KuCoin from the Ontario Market is not necessarily bad news for other unregistered crypto exchanges, but more importantly a warning signal for them regarding the importance of understanding local regulations and ensuring they comply with. In fact, KuCoin had the time to register, but never replied to the proceeding enforcement measures that were sent in 2021, and the deadline of registration was for April 19, 2021.
Canada is currently lacking a federal equivalent of the OSC or the Securities and Exchange Commission (SEC) in the U.S, which can create unnecessary ambiguity for crypto exchanges to conduct business within the country, but as the adoption of crypto assets grows and investors are increasingly exposed to the risk of frauds, failure of a key custodian or exchange and cyber attacks, the federal government announced in its 2022 budget that it would conduct a legislative review of the financial sector in addition to the guidance issued by provincial securities legislators on crypto assets and crypto asset exchanges.
Furthermore, the Bank of Canada, which currently chairs the FSB Regulatory Issues of stablecoins working group working towards a global regulatory response towards stablecoins, has called for a faster response from provincial and federal regulatory authorities to quickly develop an integrated regulatory regime for crypto assets in order to protect investors and prevent AML & compliance risks associated with crypto such as money laundering and terrorist financing.
Clear regulations and an integrated approach may finally prove to be the catalyst required for increased institutional and retail adoption while minimizing risks, thus making crypto assets a more secure and less volatile asset class.
Source: Ontario Securities Commission's building in Toronto (Paolo Costa Baldi/Wikimedia Commons)
https://www.coindesk.com/business/2022/06/22/ontario-securities-commission-slaps-bybit-and-kucoin-with-enforcement-actions/
https://financialpost.com/fp-finance/cryptocurrency/binance-expects-to-return-to-ontario-by-2024-at-the-latest-canada-ceo-says
https://www.bankofcanada.ca/2022/06/financial-system-review-2022/#box5
Republican And Democratic Senators Release Bitcoin Bill That Would Bridge Crypto And Traditional Finance
[Forbes]
U.S. Senators Kirsten Gillibrand (D-NY), a member of the Senate Agriculture Committee, and Cynthia Lummis (R-WY), a member of the Senate Banking Committee, have introduced the Responsible Financial Innovation Act that would redefine the U.S. government’s relationship with bitcoin and other cryptocurrencies. It is the first major bipartisan attempt to create a comprehensive regulatory framework for digital assets in the U.S. If it becomes law, the bill would not only define many long-confusing terms and battles over jurisdiction but formally recognize digital assets as a legitimate part of the U.S. financial system, requiring regulators to study and clarify their positions on various issues. The act covers provisions such as the determination of digital assets as commodities or securities, definitions of digital assets, assignment of regulatory authority, regulatory framework for stablecoins, governance committees, disclosure requirements, energy consumption study, regulatory sandbox, and taxation. Such a regulatory framework to legitimize the crypto ecosystem may motivate the financial institutions and traditional financial players to enter into the digital asset space by building newer business models.
https://www.forbes.com/sites/ninabambysheva/2022/06/07/republican-and-democratic-senators-release-bitcoin-bill-that-would-bridge-crypto-and-traditional-finance/?sh=29ff0b7e7761
https://www.gillibrand.senate.gov/news/press/release/-lummis-gillibrand-introduce-landmark-legislation-to-create-regulatory-framework-for-digital-assets
REGION: EUROPE
UK Government Pushes the Nation to Be a Global Crypto Hub, Says Digital Minister
[Crypto potato]
Chris Philp, the digital minister of the United Kingdom, revealed that the UK government plans to turn the country into a “global crypto hub” while reiterating a cautious stance regarding the potential crimes within the digital asset space. The minister stated that the government would push to develop the country and London into crypto centers. It came after the UK treasury touted such a strategy in April, as the crypto industry had sparred with the nation’s regulators that imposed overarching oversights on the sector. However, he insisted that cooperating with regulatory authorities such as the Financial Conduct Authority (FCA) and the Bank of England is necessary for ensuring that “balance is struck in the right way.” The UK government is probably realizing the potential economic growth possible while allowing crypto firms to flourish in its economy as talent and businesses will move to such locations proliferating further ecosystems. Maintaining a regulated crypto environment while allowing innovation to flourish may be the right direction for such nations. Even Though UK announced in April 2022 that they intend to be a global crypto hub, having a minister advocating for the country’s stance even in such volatile times showcases their commitment to be a global crypto hub.
https://cryptopotato.com/uk-government-pushes-the-nation-to-be-a-global-crypto-hub-says-digital-minister/
Amsterdam to launch its own digital currency to promote local economy
[NL Times]
Amsterdam plans to launch its own digital currency in the next four years. The coin can only be used in Amsterdam by local entrepreneurs with the idea of boosting the neighborhood economy. Economist Jalal Selmani mentioned that the currency's success depends on many things, including being easy to use and having entrepreneurs willing to cooperate. "The aim of such a coin is that everyone will use it. If only a part of the local population uses it, it is questionable whether it is worth anything." The city council will have to launch a good PR campaign for the coin, he said. The local coin only for Amsterdam is intended to keep the currency within the city to prevent it from going outside. It may help to ensure that the currency creates a stickiness factor with the citizens and businesses to spend locally but this is to be tested out. A pilot run to test the adoption and the usability of the currency is likely to be a good step to include in the journey allowing for key performance indicators to be measured and analyzed. The economist has rightly pointed out that adoption is a key parameter for the success of any new currency and needs to be properly conducted to ensure success of the currency.
https://nltimes.nl/2022/06/18/amsterdam-launch-its-digital-currency-promote-local-economy
SIX Digital Exchange unveils Web3 services: digital asset custody, crypto staking
[Ledger Insights]
Europe's 3rd largest stock exchange, Six Swiss Exchange, announced the launch of SDX Web3 Services, the offering will be targeting financial institutions. The Swiss exchange will focus primarily on the most prominent Web3 applications, including crypto-currencies, NFTs and digital assets. This move should lead other firms offering the same type of services to follow the path towards enabling a Web3 ecosystem. Let's recall that in early 2022, the NYSE had filed a trademark for an NFT marketplace.
Six Swiss Exchange is not the only exchange that has entered the Web3 space this month. On June 17th, the Nasdaq bell-ringing ceremony occurred both physically and in the metaverse world for the first time. Nasdaq has also announced the opening of its offices in several metaverse platforms, including Core Metaverse, Decentraland, The Sandbox, Roblox, and Fortnite Creative.
With these two major global exchanges announcing their entry into the Web3 and metaverse, this is a clear sign that investors may have to start paying more attention to the Web3 ecosystem, because it may very well become the future of investing.
Image source: Ledger Insights
https://www.fastcompany.com/90762046/nasdaq-opening-bell-metaverse-live-stream
https://www.ledgerinsights.com/six-digital-exchange-unveils-web3-services-digital-asset-custody-crypto-staking/
REGION: MEA
Central Bank of Nigeria (CBN) to introduce USSD code to improve eNaira
[Premium Times]
The Central Bank of Nigeria (CBN), says it is set to introduce the Unstructured Supplementary (USSD) code as part of steps to improve the Central Bank Digital Currency (CBDC). Mr Kingsley Obiora, Deputy Governor of the CBN, said the introduction of the USSD code became necessary to improve financial inclusion in the country and to ensure people without smartphones could still transact on the eNaira platform. CBN’s CBDC system is designed by Bitt Inc., a CBDC software provider, who is an innovator and pioneer in the CBDC space. USSD allows people with feature phones ie. non-smart phones to make CBDC transactions. USSD may not fit into the true definition of universal accessibility but makes the stride in the right direction. Only 50% of the mobile phone users have access to the internet, so the USSD feature may help users to gain access to CBDCs. Since "offline" alternatives are being explored, but have yet to be deployed, even with USSD, a gap will remain in achieving complete financial inclusion of the solution.
Image source: Stahouse/Femi Adesina’s Facebook Page
https://www.premiumtimesng.com/news/top-news/536259-cbn-to-introduce-ussd-code-to-improve-enaira.html
https://www.connectingafrica.com/author.asp?section_id=761&doc_id=767400#:~:text=In%20Nigeria%20if%20you%20look,and%2013.8%25%20have%20a%20tablet
How Decentralized Finance Supports Dubai's Growing Crypto Economy
[Entrepreneur Middle East]
Dubai, a city with a flourishing economy, is a trailblazer for technological innovation, and it is now competing to become a global hub for blockchain innovation and crypto enthusiasts. Crypto exchange ByBit recently stated it would relocate its global headquarters from Singapore to Dubai, joining major industry players Crypto.com, FTX, and Binance in establishing a foothold in the city. In 2021 alone, Dubai Multi Commodities Center issued licenses to over 150 crypto blockchain businesses. The new opportunities and benefits of DeFi, including exposure to Bitcoin and other cryptocurrencies, are increasingly appealing to the High Net Worth Individuals. The average interest rate for personal loans in Dubai is 11%. This has resulted in many residents being compelled to look to DeFi as an alternative borrowing source. On February 28, 2022, the Emirate of Dubai enacted Law No. 4 of 2022 on the Regulation of Virtual Assets (“VAL”) and established the Dubai Virtual Assets Regulatory Authority (“VARA”). By establishing a legal framework for businesses related to virtual assets, including crypto assets and non-fungible tokens (NFTs), this landmark law reflects Dubai’s vision to become one of the leading jurisdictions for entrepreneurs and investors of blockchain technology. Dubai may turn out to be a good fit for crypto businesses because of its low tax, crypto specific regulations, and its financial hub presence. Other countries looking to capture the position of global crypto hub could consider similar transparent regulations and methods to attract talent and businesses.
https://www.entrepreneur.com/article/428760
https://www.huntonprivacyblog.com/2022/04/07/dubai-issues-its-first-crypto-law-regulating-virtual-assets/#:~:text=On%20February%2028%2C%202022%2C%20the,Authority%20(%E2%80%9CVARA%E2%80%9D).
Crypto: National Bank of Ethiopia bans digital currency
[Brokena]
Contrary to Dubai, the National Bank of Ethiopia announced that cryptocurrencies and other forms of digital currencies are illegal in the country. The use of digital currency is not only illegal in Ethiopia but also should be reported to law enforcement authorities and the Central Bank has warned its residents not to use any form of digital currency. This ban is motivated by the Central Bank observing large transactions in digital currencies and the creation of a situation for criminals to take illegally obtained money out of the country. Crypto currency monitoring tools exist to allow users to monitor such transactions and set in alerts for the same. Given the limited resources of some countries,national banks like that of Ethiopia could consider creating such monitoring tools to identify illegal transactions and identify the individuals rather than an outright ban; particularly since the ban may not be fully helpful to prevent such transactions from taking place. Since the decentralized nature of cryptocurrencies allows sending and receiving of cryptocurrencies on the web without a centralized authority, it might be very difficult to ban such transactions. It also affects the growth of talent and businesses in crypto spaces and inflow of foreign remittances into the country. Are Central Banks considering the economic and pragmatic aspects before imposing such bans.
https://borkena.com/2022/06/06/crypto-national-bank-of-ethiopia-bans-digital-currency/
REGION: APAC
Russian state-owned company builds blockchain-based replacement for SWIFT
[Coingeek]
With Russia’s war on Ukraine resulting in international backlash and sanctions against the country, Rostec, a state-owned defense conglomerate headquartered in Moscow, has announced that it has developed a blockchain platform that can be used for international settlements. Named the CELLS industrial blockchain, it is Russia’s purported replacement for SWIFT. According to the firm, the blockchain payments system can process over hundred thousand transactions per second and also allow settlements in national currencies, providing a means to circumvent international sanctions.
Moreover, Russia is also making progress on the development of its own Central Bank Digital Currency, the digital ruble, with 12 banks announcing the advance of the consumer pilots in April 2023 rather than 2014. CELLS and the digital ruble could facilitate transactions between Russia and its partners who can support this novel monetary instrument. Countries or bodies that impose sanctions might need to come up with novel means to implement sanctions over digital assets, and importantly to act in concert and in a coordinated manner.
https://coingeek.com/russian-state-owned-company-builds-blockchain-based-replacement-for-swift/
https://www.ledgerinsights.com/russia-digital-ruble-2023-cbdc-swift/
Russia's Gazpromneft and BitRiver Partner to Develop Crypto Mining Operations
[CoinDesk]
Russia's Gazpromneft and U.S.-sanctioned bitcoin (BTC) mining hosting firm BitRiver plan to develop crypto mining facilities at oil fields. Gazpromneft will provide energy to data centers set up by BitRiver. The mining operations may use unused flared gas, from Gazpromneft sites, which is an otherwise wasted byproduct of Oil & Gas drilling operations.
Though the practice of using unused flared gas is garnering interest internationally in many oil rich nations such as Canada, UAE and Oman, as a better alternative to burning the gas and increasing pollution, the impact of countries using Bitcoin to evade sanctions by monetizing their natural resource assets needs to be assessed.
The crypto industry has been taking steps to reduce its carbon impact and improve its sustainability by utilizing more renewable energy and energy from wasted sources such as flared gas to help improve its image and attract investors. Although countries worldwide are working towards setting standards and regulating the crypto industry to protect investors and prevent illegal activities it is upto to crypto industry and market players as a whole, who would need to come together and set rigid AML & compliance industry standards to prevent potential negative impacts of bad actors trying to indirectly take advantage of crypto to evade sanctions and potentially fund destructive activities.
Image source: CoinDesk
https://www.coindesk.com/business/2022/06/16/russias-gazpromneft-and-bitriver-partner-to-develop-crypto-mining-operations/
3iQ Launches Australia’s Third Bitcoin ETF With A Unique Structure
[Last Cryptocurrency]
3iQ, the oldest and largest digital asset investment fund in Canada has launched 3iQ CoinShares Bitcoin Feeder ETF and 3iQ CoinShares Ethereum Feeder ETF on the Cboe exchange in Australia.
The mutual fund type investment vehicles both domiciled in Australia look to provide investors with indirect access to spot Bitcoin prices through an underlying fund. The underlying funds are the 3iQ CoinShares Bitcoin ETF and the 3iQ CoinShares Ether ETF (together, the Underlying ETFs), respectively, both of which are listed on the Toronto Stock Exchange.
The fund will have the lowest fee structure among bitcoin ETF’s in Australia and would help provide investors an alternative means of cryptocurrency investment rather than take direct exposure to this highly volatile asset class.
As cryptocurrency adoption and use cases are growing, many fund managers are looking to establish ETF’s and other types of investment vehicles to attract institutional and retail investors who have lower risk appetite while still wanting to gain exposure to crypto currencies.
https://www.lastcryptocurrency.com/3iq-launches-australias-third-bitcoin-etf-with-a-unique-structure/
https://3iq.ca/3iq-launches-3iq-coinshares-bitcoin-feeder-etf-and-3iq-coinshares-ether-feeder-etf-on-cboe-australia/
REGION: SOUTH AMERICA
Brazilian proposal would make crypto payments legal and protect private keys
[Cointelegraph]
A law was proposed to make cryptocurrency legal tender in Brazil, which would allow Brazilians to use cryptocurrency as a means of payment. It's important to note, that unlike in El Salvador where Bitcoin is considered the country's legal tender, in the event that the bill passes to Brazil, the cryptocurrency would be considered more as a financial asset for investments and other uses.
The proposal also outlines new powers and limitations that the court will have, including the ability to freeze exchange accounts. However, if the bill passes the court won’t be able to seize the user's private key. This bill would provide greater clarity regarding the regulation of crypto-currencies in Brazil.
However, this new addition could take years before it is accepted by the Senate and signed by the President.
https://cointelegraph.com/news/brazilian-proposal-would-make-crypto-payments-legal-and-protect-private-keys
OTHER READS
Asia Financial: Shenzhen Using Digital Yuan to Boost Covid-Hit Economy and $4.5M air dropped: https://www.asiafinancial.com/shenzhen-using-digital-yuan-to-boost-covid-hit-economy
https://insidebusiness.ng/183887/china-plans-to-airdrop-4-5-million-in-cbdc-to-shenzhen-dwellers/
Atlantic Council: Missing Key: The challenge of cybersecurity and central bank digital currency: https://www.atlanticcouncil.org/in-depth-research-reports/report/missing-key/
AWS: Retail Central Bank Digital Currency: From Vision to Design: https://pages.awscloud.com/GLOBAL-public-DL-OWF-AWS-Retail-CBDC-whitepaper-2022-confirmation.html
Bank of Canada Financial System Review - 2022: https://www.bankofcanada.ca/2022/06/financial-system-review-2022/#box5
BCG: Digital Payments in India Projected To Reach $10 Trillion by 2026: BCG and PhonePe Pulse Release Report on Digital Payments: https://www.bcg.com/fr-fr/press/2june2022-digital-payments-in-india-projected-to-reach-10-trillion-by-2026
BIS: Corporate digital identity: no silver bullet, but a silver lining: https://www.bis.org/publ/bppdf/bispap126.htm
BIS: Future of monetary system: https://www.bis.org/publ/arpdf/ar2022e3.htm
BIS: Using CBDCs across borders: lessons from practical experiments: https://www.bis.org/publ/othp51.htm
Blockworks: Bitgo launches first NFT custody platform for US institutions: https://blockworks.co/bitgo-launches-first-nft-custody-platform-for-us-institutions/
BusinessWire: Mojaloop Foundation Launches the Mojaloop CBDC Center of Excellence in Singapore: https://www.businesswire.com/news/home/20220621006160/en/Mojaloop-Foundation-Launches-the-Mojaloop-CBDC-Center-of-Excellence-in-Singapore
CoinDesk: DeFi Protocol Solend Passes Governance Vote to Reverse ‘Emergency Powers’: https://www.coindesk.com/business/2022/06/20/defi-protocol-solend-passes-governance-vote-to-reverse-emergency-powers/
CoinDesk: Digital Dollar Would Secure Greenback as Global Reserve Currency, Lawmaker Argues: https://www.coindesk.com/policy/2022/06/22/digital-dollar-would-secure-greenback-as-global-reserve-currency-lawmaker-argues/
CoinDesk: First short bitcoin ETF to list on NYSE: https://www.coindesk.com/business/2022/06/20/first-short-bitcoin-etf-to-list-on-nyse/
CoinDesk: Goldman Sachs Executes Its First Trade of Ether-Linked Derivative: https://www.coindesk.com/business/2022/06/13/goldman-sachs-executes-its-first-trade-of-ether-linked-derivative-report/
CoinDesk: JPMorgan Wants to Bring Trillions of Dollars of Tokenized Assets to DeFi: https://www.coindesk.com/business/2022/06/11/jpmorgan-wants-to-bring-trillions-of-dollars-of-tokenized-assets-to-defi
CoinDesk: Three Arrows Capital Liquidation Ordered in British Virgin Islands: https://www.coindesk.com/business/2022/06/29/three-arrows-capital-liquidation-ordered-in-british-virgin-isles-report/
CoinDesk: Voyager Digital Plunges on Three Arrows Exposure, Analyst Downgrade: https://www.coindesk.com/business/2022/06/22/voyager-digital-requests-loan-repayment-from-3ac-considers-issuing-default-notice/
Daily Crypto: Chongqing Launches Tax Payment Pilot For Digital Yuan: https://dailycrypto.us.com/chongqing-launches-tax-payment-pilot-for-digital-yuan/
Economist: Digimentality 2022: https://impact.economist.com/projects/digimentality-2022/
IMF: Digital Currencies and Energy Consumption: https://www.imf.org/en/Publications/fintech-notes/Issues/2022/06/07/Digital-Currencies-and-Energy-Consumption-517866
Inside Bitcoin: Japan’s parliament passes a bill focused on stablecoin regulations: https://insidebitcoins.com/news/japans-parliament-passes-a-bill-focused-on-stablecoin-regulations
Morning Consult:Widespread e-CNY Adoption in China Is Coming, Whether Banks and Businesses Like It or Not: https://morningconsult.com/2022/06/13/e-cny-adoption-in-china-is-coming/
SouthAsia Morning Post: China’s digital currency: e-CNY trials move beyond retail to cover corporate loans for small businesses and tax payments: https://www.scmp.com/tech/big-tech/article/3181809/chinas-digital-currency-e-cny-trials-move-beyond-retail-cover?utm_source=rss_feed
VISA: The art of public money: Policy considerations for central bank digital currencies: https://usa.visa.com/content/dam/VCOM/regional/na/us/sites/documents/veei-the-art-of-public-money.pdf
ENOUGH OF INTENSE NEWS… SOMETHING LIGHT ;)
RECOGNIZING BLOCKZERO TALENT
Sabrina McNeil was promoted to Senior Consultant, a result of her dedication to continuous striving to learn and deliver quality work for our clients. Sabrina brings in deep market knowledge and technological understanding of the various layers of protocols that continuously evolve, from cryptocurrencies, tokenized assets, NFTs and the Metaverse. Congratulations Sabrina on this well-deserved promotion!
BLOCKZERO IN THE COMMUNITY
Arun Balu Pazhayannur, Manager at BlockZero, had the opportunity to provide a presentation on Digital Assets to the future men and women leaders in India.
Overview of Digital Assets
Organized by: Soundarya Institute of Management, Bangalore, India
Audience: 600+ college graduates
Duration: 1 hour
Key message: BlockZero provides niche digital asset consulting for firms interested in the evolution of their financial infrastructure. Digital assets present a huge opportunity for the economy and effort has to be done to set it up.
WHO ARE WE:
BlockZero is a boutique consulting firm specializing in the evolution of the financial infrastructure through digital assets, digital currency, stablecoins and Central Bank Digital Currency (CBDC).
BlockZero advises global financial institutions, central banks and financial technology companies in the exploration, experimentation, technical implementation and rolling out of digital asset-based infrastructure.