NEWS UPDATES JULY 21, 2022
1. BTC/USD retreats from five-week top as Tesla reveals Bitcoin sale
* BTC/USD remains pressured after snapping two-day uptrend around monthly peak.
* Tesla reveals significant sale of Bitcoin holdings in latest earnings report.
* US dollar rebound on recession fears also tease sellers.
BTC/USD bears the burden of Tesla’s dislike for Bitcoin as bulls retreat from monthly peak. However, the Bitcoin pair remains mildly bid at around $23,200 during early Thursday as traders brace for fresh clues.
“Tesla sold $936 million worth of bitcoin in the second quarter, more than a year after the company bought $1.5 billion of the cryptocurrency at the peak of its massive growth and popularity,” said Reuters. The news also mentioned that the automaker sold 75% of its Bitcoin holdings. Tesla’s CEO Elon Musk added that Tesla did not sell any of its dogecoin, a meme-based cryptocurrency that he has touted, as reported by Reuters.
It’s worth noting that the US Dollar’s rebound amid the return of the recession fears also could have weighed on the BTC/USD prices. That said, the US Dollar Index (DXY) dribbles around 107.05 after bouncing off a fortnight low the previous day. The DXY’s prior gains could be linked to the market’s fears of recession emanating from Europe and strong inflation data from the UK, as well as from Canada. Also underpinning the US dollar’s safe-haven demand were the Sino-American tensions and China’s covid woes.
Moving on, updates surrounding the market’s risk profile and equities could help determine short-term BTC/USD moves as sour sentiment could join Tesla’s news to weigh on the Bitcoin pair.
*Technical analysis*
BTC/USD bulls witness immediate defeat from the 50-day EMA level surrounding $23,400, ahead of May’s low near $25,380. Meanwhile, pullback remains elusive unless staying beyond the previous resistance line from June 21, at $22,950.
2. US SEC Chairman Says He Is Neutral About Crypto But Not About Investor Protection.
SEC Chair Gary Gensler talks about his position in regard to crypto technology and the risks involved in their investments.
For years, cryptocurrencies have amassed a massive following by investors and traders across the world. As years passed, more crypto projects popped up in the space. There are now thousands of cryptos in the market.
With this popularity, acceptance and adoption have increased, and even mainstream financial institutions and investment firms are now venturing into the crypto space. However, the issue of regulation has remained a hard nut to crack for many governments, with some opting to ban cryptos altogether.
What The SEC Chairman Thinks About Cryptos And Regulation
In the case of the US, the SEC (Securities and Exchange Commission) is tasked with handling such matters. During a recent interview with CNBC’s Squawk Box, SEC Chairman Gary Gensler said,
“I’m neutral about the technology, but I’m not neutral about the investor protection. These are highly speculative assets where there are thousands of tokens, most of which have attributes of securities, meaning there’s a group of sponsors and entrepreneurs raising money from the public.”
3. What Is a Layer 1 Protocol and Why Does It Matter?
What are Layer 1 blockchains, and why is it important to distinguish them from Layer 2 solutions? In the following, we’ll discuss Layer 1 networks to help you differentiate them from other blockchain solutions. You could find this useful when analyzing various blockchain projects as investments.
What Is a Layer 1 Blockchain Protocol?
Layer 1 refers to the fundamental architecture of a blockchain. It has to ensure the decentralization, security, and scalability of transactions. However, it turns out that these three elements are not that easy to merge rigidly into a single structure, which is why older blockchains, including bitcoin, had to achieve security and decentralization at the expense of scalability. Newer versions of blockchain implement Layer 1 solutions with greater attention to scalability, although they may lose on the decentralization side.
All in all, the Layer 1 protocol represents the blockchain itself. In fact, we only defined “Layer 1” after introducing “Layer 2” protocols, which are secondary networks meant to improve the scalability or security of an underlying Layer 1 infrastructure. For example, the Lightning Network is a Layer 2 solution for bitcoin, which acts as Layer 1.
That being said, here are the most popular Layer 1 protocols that together account for more than 60% of the crypto market cap.
4. EU, US swap policy intel on European crypto regulation, stablecoins
* Leaders from the European Union and the United States discussed stablecoins and other crypto regulations during a joint forum last week.
* The meeting came just after the EU finalized a sweeping crypto regulation deal, MiCA.
The EU and the US swapped crypto policy insights on stablecoins and other issues during a joint financial forum in Brussels last week.
Representatives from the two governments met as part of an EU–US Joint Financial Regulatory Forum from July 13-14, the US Treasury announced. Participants discussed the EU’s new Markets in Crypto-Assets Regulation (MiCA) deal, which was finalized at the end of June.
EU participants included representatives from the European Commission and the European Banking Authority, among others. On the American side, officials and staff came from the US Treasury and agencies, including the Board of Governors of the Federal Reserve System and the Commodity Futures Trading Commission and Securities and Exchange Commission.
The US also shared policy updates on the country’s work around stablecoins and other digital assets. Participants “took stock of discussions around the development of potential central bank digital currencies.” The forum is expected to meet again early next year.
5. The UN Calls for Crytpo Clampdown in Kenya
The UN thinks that the cryptocurrency industry should become less attractive to investors, which is why it proposed implementing strict rules in it.
The United Nations (UN) advised the governments of Kenya and other developing nations to impose comprehensive regulations on their cryptocurrency sectors.
*Calling for a Clampdown*
The global organization that maintains international peace and security – the United Nations – seems to have the cryptocurrency industry in its sight.
In a recent policy brief, it urged a range of developing countries, such as Kenya, to enforce strict rules on the sector, mandatory registration on crypto exchanges, and taxation on people who have generated earnings from trading with bitcoin or altcoins. In a bid to provoke a clampdown on the industry, the UN urged to:
Subsequently, the UN called on all banks and monetary institutions to stop providing clients with cryptocurrency services, including holding stablecoins and digital assets.
*Crypto Thrives in Kenya*
The initiative proposed by the United Nations might not be met with great joy in the African country. According to a recent study conducted by the same organization, Kenya is the leader in cryptocurrency adoption on the continent: 8.5% of the locals, or 4.25 million people admitted to being HODLers.
Interestingly, this adoption rate surpassed leading economies such as the United States (8.3%), which proves the narrative that digital assets are more popular in less developed nations.
The research determined that war-torn Ukraine is the global leader, with 12.7% of its residents having exposure to crypto, while Russia is second with 11.9%. Venezuela (10.3%), which has been battling high inflation and economic turmoil for years, ranked third.
Nonetheless, the UN stated that establishing the value of digital currencies held by different countries is difficult due to the lack of supervision in the space:.
6. US 'Missing From the Table' on CBDC Discussions: Atlantic Council Director
Many countries are far ahead of the United States in developing central bank digital currencies (CBDC), and that may be for good reason, according to one financial institutions expert.
Josh Lipsky, senior director at think tank Atlantic Council’s GeoEconomics Center, told CoinDesk TV’s “First Mover” that of the 105 countries exploring implementing a CBDC, 50 are serious about it, meaning “they’re in the development, pilot or launch [phase], beyond the research stage.”
“That means they're very likely to actually go through with this,” Lipsky said.
Lipsky, who previously served as an adviser at the International Monetary Fund (IMF), said those investigating the use of a CBDC includes South Korea, Japan and India, in addition to China, which currently leads the way in pilot testing efforts. China is said to have about 250 million registered digital wallets using its digital yuan.
However, the U.S., the U.K. and Mexico are “still in the research stage” while other countries like Argentina are outliers, meaning they are “nowhere in the CBDC progress,” he added.
CBDCs are considered to be the digital form of a country’s fiat currency, which is administered by a central bank. Rather than printing physical cash, a central bank issues a digital currency that is backed by the government.
Lipsky noted the U.S. may have some justification for dragging its feet.
The U.S. has “moved more slowly because of privacy concerns,” he said. “And that’s a very legitimate concern.”
In the long run, however, delaying could put the U.S. at a disadvantage. “Now we see competitors from an economic space moving and finding solutions on those privacy answers, and the U.S. is still missing from the table a little bit,” he said.
Lipsky said he frequently talks to central bankers from around the world, and they are asking, “Where’s the U.S. model? Where’s the U.S. in standard setting?”
“I think that’s missing right now,” Lipsky said. “The U.S. could be doing more.”
Lipsky said that since Russia’s invasion of Ukraine there has been increased interest in wholesale bank-to-bank CBDCs as a result of the issues raised from banking sanctions.
Over the next five years, countries could be looking to China for their own CBDC infrastructure, Lipsky said. But that does not mean that countries are looking to use the country’s CBDC infrastructure entirely. He did not agree with former Commodity Futures Trading Commission (CFTC) chief J. Christopher Giancarlo’s comments that one-third of the world’s CBDC infrastructure could eventually be built and controlled by China.
According to Lipsky, China’s CBDC motivation is more closely aligned with its domestic affairs than its international ones, including the ability to monitor via surveillance what citizens are doing in real time.
The different iterations of CBDC infrastructure could also create challenges. Of those 105 countries considering CBDCs, Lipsky said, no two are alike, and that could carry over into digital currency cross-border transactions. “This is a real interoperability problem.”
7. Australian regulator trials auto take-down of crypto scam sites
Cybersecurity specialists have welcomed a new trial by the Australian Competition and Consumer Commission (ACCC) to automatically take down scam websites. The trial saw dozens of scam sites, including crypto scams, knocked offline after more than 300 were reported.
The ACCC reported that Australians had lost $113 million in cryptocurrency scams last year. The new trial will be in partnership with the Australian Securities and Investment Commission (ASIC) and will focus on efficiently removing scam websites once they have been reported to Australian regulators to protect potential investors from falling victim to crypto fraud.
The ACCC is using a countermeasures service from the United Kingdom-based Netcraft, which has been providing a similar service for the past four years to the U.K.’s National Cyber Security Centre.
According to an IT News report, sites already taken down include “phishing sites impersonating Australian businesses and government authorities,” along with “puppy scams, shoe scams, cryptocurrency investment scams and tech support scams.”
Ken Gamble, executive chairman of private intelligence firm IFW Global, praised the development. He told Cointelegraph this is “the best news he has heard,” as he had “seen the damage these sites made by sophisticated fraudsters have done using state of the art digital marketing techniques:
8. New South Korean Crypto Regulator ‘Days Away from Launch’, Government Confirms
The South Korean government is set to come good on a promise to launch a new regulatory agency that will govern the domestic crypto sector in the wake of what it calls the “Terra (LUNAC) incident.”
As reported in late May, the body has been tentatively named the Digital Assets Committee (literal English translation), and its creation has been fast-tracked.
The committee will liaise with the Financial Services Committee (FSC) and the Financial Supervisory Service (FSS), South Korea’s main financial regulators. Currently, the Financial Intelligence Unit (FIU), a branch of the FSC, governs crypto exchanges. It is not clear if the new committee will eventually take over this role, but its first tasks will almost certainly be policy creation-related.
Chosun Ilbo reported that the committee was on track to launch “before the end of the month,” and revealed that many of its founding members had already been appointed.
These reportedly include Ju Hyun-cheol, a lawyer who has previously worked on crypto policy for the offices of President Yoon Seok-youl. Also reportedly sitting on the committee will be Kim Gap-rae, a senior research fellow at the Capital Market Research Institute, as well as Park Seon-yeong, a Professor of Economics at Seoul’s Dongguk University.
9. Strict Thai crypto regulation causes SCB to delay Bitkub acquisition
SCB X notified the Stock Exchange of Thailand that the Bitkub acquisition is “still undergoing due diligence.”
Thailand’s oldest bank is unable to acquire the country’s largest local cryptocurrency exchange due to stringent crypto regulations.
As reported by Cointelegraph in November 2021, SCB X Group, a subsidiary of Siam Commercial Bank (SCB), was set to acquire a 51% stake in Bitkub by the second quarter of 2022 as part of a plan to become a regional fintech. Now things seem to have taken a twist, as the bank has indefinitely postponed its plans to acquire the popular exchange.
As crypto trading continues to be hampered by regulation, SCB X has indefinitely decided not to move forward with a $487 million offer for a 51% stake in Bitkub, Thailand’s major cryptocurrency exchange platform.
According to a report by Nikkei Asia on Thursday, the parent company of SCB, SCB X, informed the Stock Exchange of Thailand (SET) that the acquisition is “still undergoing due diligence.” A senior official of SCB X told the outlet that the team doesn't know when the deal will be sealed.
The news of the reschedule was revealed earlier this month when SCB X submitted a letter to SET outlining the current situation. In a statement, SCB X CEO Arthid Nanthawithaya said:
“Presently, the matter is in the process of due diligence and discussion with the regulatory bodies. Therefore, the completion period of the transaction is now extended.”
