The European Commission has proposed legislation updates this week that introduce new rules for cryptocurrency service providers. Under the new updates to the EU’s anti-money laundering and countering terrorism financing (AML/CFT) rules, providers of cryptocurrency services will be mandated to collect information on the sender and recipient of cryptocurrency transactions and the owners of cryptocurrency wallets.
The new rules effectively lift cryptocurrency service providers from a murky and unregulated industry and impose the same know-your-customer (KYC) rules that the EU financial and banking systems have been enforcing for the past decades. “The proposed reform will extend these rules to the entire crypto sector, obliging all service providers to conduct due diligence on their customers. Today’s amendments will ensure full traceability of crypto-asset transfers, such as Bitcoin, and will allow for prevention and detection of their possible use for money laundering or terrorism financing,” EC officials said today. “In addition, providing anonymous crypto-asset wallets will be prohibited, just as anonymous bank accounts are already prohibited by EU AML/CFT rules.” EU officials hope the new rules will help authorities impose stricter rules on the cryptocurrency ecosystem and crack down on cybercrime and terrorist groups using accounts at cryptocurrency exchange portals to launder illegal funds. While the new rules are being enforced in the EU, any cryptocurrency service provider that wants to operate or transfer funds to an EU entity or individual would have to collect data on all users, even if the other party resides outside the EU. The new rules are currently proposed as an amendment to the 2015 EU Regulation on transfers of funds (Regulation 2015/847). The proposed text is available here [PDF]. A vote on the proposals is expected later this year, barring any delays or additional ammendments.
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China's digital yuan trials racked up 34.5 billion yuan ($5.34 billion) in transactions by the end of June, according to a white paper released Friday by the People's Bank of China. The currency has been used in 70.75 million payments so far across more than 1.32 million "scenarios" -- not only in retail settings like stores and restaurants, but also for public transportation, utility bills and government services. The central bank said it has "no preset timetable" for a full launch.
The test shows the rapid strides Beijing has made toward a central bank digital currency, an idea that is seeing increasing interest elsewhere in the world, including in the U.S. China has recently cracked down on other digital currencies, with the PBOC warning that asset-linked "stablecoins" pose risks to global financial systems. The pilot program for the virtual currency began in late 2019 in five locations, including Shenzhen and venues for the 2022 Winter Olympics in Beijing, with Shanghai and five others added last November. More than 20.87 million personal wallets and 3.51 million wallets for organizations and companies have been created so far. Smartphone apps, wearable devices and smart cards can all house digital-yuan wallets. According to a source familiar with the situation, the PBOC intends to continue local trials during the 2022 Winter Olympics in Beijing toward an official rollout as early as next year. For now, the central bank will further expand the pilot program to cover "all possible scenarios" for transactions and improve the system's stability and data security. Research will continue into the digital yuan's impact on monetary policy and the financial system, and Beijing will move forward with changes to the relevant legislation to provide a legal basis for the currency. Since July 8, 2021, crypto exchange Binance will no longer accept SEPA payments. That news came out recently and is a disappointment for Europeans as it is now no longer possible to deposit euros for free on the world's largest exchange. Binance CEO Changpeng Zhao shared an open letter today about the situation his company is in.
As a crypto exchange you have to adhere to a lot of rules because you handle financial resources and sensitive data. The crypto industry is a fledgling emerging industry, so clear rules for crypto companies to adhere to are still lacking in many areas. It is also often seen that old rules for the traditional financial world are applied to the crypto sector, which even recently led to a lawsuit in our own country. Binance is now facing headwinds in a number of countries worldwide. In his open letter today, Zhao states that there is a certain “hyperfocus” emerging among crypto regulators. Nevertheless, the CEO emphasizes that one of Binance's core principles is to partner with governments. However, many countries still lack clear regulations. But, Zhao says, “compliance is a journey.” Zhao compares the current regulatory and crypto environment to the rise of the automobile. “When the automobile was first invented, there were no traffic laws, traffic lights, or even seat belts.” The CEO further explains: “Over time, laws and guidelines were developed as the cars were on the road. These are frameworks and laws that we take for granted today, allowing this powerful technology to be used widely and securely. Crypto is similar in that it can be accessible to anyone, but frameworks are needed to prevent abuse and bad actors. Clarifying and drafting the first set of standards is critical to the continued growth of the industry. And Binance wants to make a positive contribution.” The rise in popularity of cryptocurrency and the digital token market received with enthusiasm the news that two of Wall Street's best-known funds will start investing in this revolutionary technology. George Soros and the Rockefeller family have taken their first steps to invest in cryptocurrency.
The man who managed to break the Bank of England was skeptical at the beginning of the year regarding virtual currencies, now however he gives its fund manager the go-ahead to start operating with these assets. Adam Fisher, who oversees the macroinvestments of Soros Fund Management and who moves $26bn from his headquarters in New York, has obtained internal permission to start trading with virtual currencies, the US news agency Bloomberg said. However, it is not Soros' first move regarding crypto markets, he has already been indirectly betting on them. His fund acquired a large share in 'Overstock.com' at the end of 2017, thus becoming the third owner of the e-commerce company. This company became the first retailer to accept digital tokens as a means of payment in August last year, as well as plans to launch a cryptocurrency stock market that can operate within the platform. The Rockefellers adopted a similar strategy, who announced in April a cooperation agreement with the CoinFund company that is dedicated to investments in crypto currencies. Venrock, the family's official venture capital arm, was the one who carried out the operation, and whose partner, David Pakman, called it a "long-term investment". The cryptocurrency market attracts more and more personalities, although it is not necessary to be one of them to start investing. Millions of people have already discovered the smartest strategies to invest with eToro, the leading social trading network worldwide. Thanks to the risk management tools offered by this platform, every user can protect their positions and enjoy deposits and withdrawals without complications and instantaneous execution. In addition, eToro offers its new members a free $100,000 account with which to measure and test their strategy. Due to the social nature of this community, users can discuss with the best eToro investors about cryptocurrency investment strategies such as Bitcoin, using the 'CopyTrader' technology that automatically clones the investment portfolios of the most successful traders. Goldman Sachs investment strategy group released a report titled “Digital Assets: beauty is not in the eye of the beholder,” in which the investment banking giant wrote about the world of cryptocurrencies. The report stated that the purpose of the insight was to “address our clients’ questions by analyzing the desirability, even viability, of cryptocurrencies as an investment asset class and examining a possible role for cryptocurrencies in our clients’ customized strategic asset allocation process, within the framework of our investment philosophy.” A section of the report focused on hedge inflation or deflation as a store of value with Goldman Sachs stating that Gold is not an optimal store of value. Gold was introduced into the analysis because people have claimed Bitcoin to be the “Digital Gold.” Goldman Sachs looked at the performance of Gold to shows that even if Bitcoin is supposedly Digital Gold, the commodity itself (Gold) has not been an effective hedge against inflation as most people think it has been. The reason stated in the report is described below.
The report stated, “We also conclude that the risk, return and uncertainty characteristics of Bitcoin based on our multi-factor model do not support an allocation to Bitcoin. We do not believe that cryptocurrencies are a strategic asset class that adds value to our clients’ portfolios.”
Gold, so far, has been struggling this year to gain momentum, falling to the strength of the U.S Dollar. The yellow metal is down 7.77% at the current market price of $1,791, as of the time of writing this report. The yellow metal, however, seems to be gaining momentum as Central banks from Serbia to Thailand have been adding to gold holdings. Also in Ghana, the country recently announced plans for purchases, as the worry of accelerating inflation looms and a recovery in global trade provides the firepower to make purchases. The booming popularity of cryptocurrency has triggered criticism across the globe, particularly in Vietnam. However, both investors and regulators have shown keen interest in a potential central bank digital currency. Statistics compiled by cryptocurrency data provider Chainalysis ranked Vietnam 13th in Bitcoin investment gains at $351 million in 2020. The country outweighed several larger and more developed economies such as Australia, Saudi Arabia, and Belgium. To boot, Vietnam has high levels of grassroots cryptocurrency adoption, ranking tenth overall on Chainalysis’ Global Crypto Adoption Index.
“Upon further inspection, what stands out the most is the number of countries that appear to be punching above their weight in Bitcoin investment as compared to their rankings in traditional economic metrics. Vietnam can perfectly epitomise the situation,” the data analysis noted. Elsewhere, according to a recent survey in March by Statista, 21 per cent of around 1,000-4,000 respondents in Vietnam said they had used or owned cryptocurrencies in 2020. While Vietnam has seen extraordinary economic growth over the last two decades, significantly reducing its poverty rate from over 70 per cent to below 6 per cent since 2002, the country ranks 53rd in GDP at $262 billion and is categorised as a lower-middle income country by the World Bank, according to Chainalysis. Meanwhile, US investors are the greatest beneficiaries, collectively making over $4 billion in realised Bitcoin gains in 2020 – three times as much as the next highest country, China. The surging appetite for bitcoin and other types of cryptocurrencies is undeniable, illustrated by their skyrocketing price over year within one year. As of July 3, 2021, Bitcoin price reached nearly $34,000, compared to around $9,000 in the same day last year. Several central banks across the globe have aired intentions to trial central bank digital currencies (CBDC) trials, including the Bank of Korea (BoK) and Bank of Japan (BoJ). BOK and BOJ's experiments to study the feasibility of issuing their own digital CBDC would pave the way for South Korean and Japanese companies, including those operating in Vietnam, to implement digital currencies. Regulators believe CBDC could "modernise their financial systems, ward off the threat from cryptocurrencies and speed up domestic and international payments," according to Reuters. Regional asset owners are still wary of volatile cryptocurrencies, but they say central bank-backed digital currencies could become investment-friendly over the next five to 10 years, according to Financial Times. The BoJ in April confirmed it would test the technical feasibility of the core functions and features required for CBDCs as a payment instrument, including issuance, distribution, and redemption. Similarly, the BoK said on May 24 that it would start a 10-month test of the digital won in August with a budget of around $4.45 million. Most recently, El Salvador became the very first country in the world to adopt bitcoin as legal tender at the beginning of June, a move that delighted the currency’s supporters. |
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