News Updates February 02, 2023
1. Bitcoin (BTC) Price Reacts to Fed’s Latest Rate Hike. The U.S. Federal Reserve made a decision to hike its target interest rate by a quarter of a percentage point during its first policy meeting of 2023. This came after the world’s most powerful central bank implemented a series of significant interest rate hikes last year in order to battle inflation. Recent data indicated that the Fed had partially succeeded in snuffing out inflation. Bitcoin’s terrible performance in 2022 was mainly attributed to the Fed’s extremely hawkish monetary policy. For now, however, a Fed pivot remains unlikely, and the central bank is determined to continue its inflation fight. The central bank believes that ongoing rate increases will be appropriate. The Bitcoin price experienced minor volatility following the announcement, currently trading at roughly $23,000.
Meanwhile, major U.S. stock market indices pared their losses following the announcement. Fed Chair Jerome Powell has signaled that the Fed is determined to stay the course until the job is done. He added that it would take more time for the full effect of Fed actions to be visible. He has stressed that the central bank is yet to reach a "sufficiently restrictive level" on interest rates. At the same time, Powell described recent inflation data as "encouraging." However, more data is needed in order to be able to see the bigger picture. For now, declaring a victory would be premature for the Fed, according to Powell. However, more investors appear to be confident that the Fed will pull off a soft landing.
2. Bitzlato CEO arrested by Spanish police: Report
Authorities seized an estimated $19.8 million worth of crypto, fiat and luxury goods from Bitzlato executives related to an ongoing money laundering investigation.
According to a Feb. 2 report by Turkish news agency Anadolu, Spanish authorities have arrested the CEO, sales executive and marketing director of Hong Kong cryptocurrency exchange Bitzlato. In total, six Russian and Ukrainian nationals related to the exchange were arrested in a joint effort between France, Portugal, Cyprus and United States law enforcement.
As told by Spanish police, the exchange's anonymity allowed it to become the platform of choice for criminal organizations seeking to launder money via cryptocurrency. Authorities seized $19.8 million (18 million euros) in digital assets, luxury cars, cash, smartphones and other items related to the investigation and blocked over 100 exchange accounts.
The move comes just two days after co-founder Anton Shkurenko stated in an interview that 50% of the Bitcoin
BTC $24,067 held in Bitzlato wallets could be withdrawn the same day the exchange relaunches after investigators seized approximately 35% of users' funds held in the exchange's hot wallets. Regarding this matter, Shkruenko also explained that the new Bitzlato will be based in Russia and "out of reach of law enforcement authorities."
3. UK Crypto Industry Celebrates Government’s Planned Exemptions for Crypto Ad Approvals
But the country’s financial watchdog says it will “take a consistent approach to that taken for other high-risk investments,” when the time comes to set up enforcement rules.
The U.K. crypto industry has welcomed a government decision to introduce a bespoke exemption for crypto companies looking to advertise to local customers. But the country’s financial regulator is a bit more cautious.
As part of the government’s plans to bring crypto promotions into the scope of regulations, a new rule added to the Financial Services and Markets Act moving through Parliament included restrictions on who gets to approve crypto ads. The requirement would have meant most crypto firms “will not be able to communicate their own promotions, unlike other financial services firms” which are authorized “by virtue” of having other relevant permissions, the U.K. Treasury said on Wednesday, but the exemption (which is not in effect yet) announced on Tuesday means crypto companies can approve their own promotions for the time being.
Feedback from the industry made it clear that not many qualified people would have been willing to approve crypto ads, and the government's plan would have amounted to “an effective ban,” the Treasury said.
“I think that was a great win for the industry. I've lobbied for this and I know some of my clients have, industry bodies have and I think we got exactly what we asked for,” said Diego Ballon Ossio, a senior associate at U.K.-based law firm Clifford and Chance. Ian Taylor, director at lobby group CryptoUK and Mark Aruliah, senior policy adviser at Elliptic echoed this.
Not everyone welcomes the Treasury’s exemption. Given the Financial Conduct Authority’s (FCA) increasing focus on consumer protection “it is hard to see how the regulator could ever agree to this,” said James Alleyne, legal director at Kingsley Napley, who worked at the FCA previously in an emailed statement.
A new set of much-anticipated regulatory plans published by the Treasury on Wednesday could make it mandatory for crypto firms to be authorized by the Financial Conduct Authority (FCA). For now, firms have to apply for FCA registration under its anti-money laundering regime.
But registration isn’t exactly a walk in the park either. The FCA has only approved 14% of the registrations it received from crypto businesses, and is known for being critical of crypto, unlike the U.K.’s Conservative government, which has repeatedly stated its desire to turn the country into a crypto hub.
“We will publish our final rules for crypto asset promotions when the relevant legislation is made. We expect to take a consistent approach to that taken for other high-risk investments,” an FCA spokesperson told CoinDesk in an emailed statement. “Crypto assets are high risk and anyone who purchases them should be prepared to lose all their money.”
The government has “taken the hard decision to listen to the industry,” regardless of what the regulator thinks, Aruliah said.
4. Japanese Prime Minister Be Positive When Talking About The Necessity Of The Web3
According to CoinPost, Japanese Prime Minister Fumio Kishida responded to Liberal Democratic Party member Yoshiaki Hira’s argument on “the reason why Japan’s policy needs Web3” at the Budget Committee of the House of Representatives yesterday.
Kishida Fumio said:
“There are various possibilities for the flexible use of Web3. For example, DAO can also form a new community with people interested in the same social issues. NFT may also diversify the benefits of creators and can be used to Maintain and increase fan loyalty. Web3 may be a powerful tool for Cool Japan policy and regional revitalization.”
He gave an affirmative answer while actively using terms related to Web3.
It is reported that the “Cool Japan” policy put forward by the Japanese government in the second decade of the 21st century is an international strategy centered on the cultural industry.
On the other hand, as a current issue, a discussion at the Web3 study group held last year at the Digital Agency said:
“Because it is a new technology, local governments and businesses are hesitant to use it due to concerns about compatibility with existing systems. The case is assumed.”
The Japanese Prime Minister said:
“It is important to proceed with the consolidation of issues for technology utilization. It is necessary to consider what kind of support should be provided based on discussions in the Liberal Democratic Party.”
Users of cryptocurrencies in Japan have witnessed a number of changes during Kishida’s term in power, including Mt. Gox going forward with reimbursement procedures after years of legal hurdles and the reinstatement of cryptocurrency ATMs in the nation.
Regulators of Japan have started pressing regulators in the U.S., Europe, and elsewhere to subject cryptocurrency exchanges to regulations similar to those faced by banks and brokerages.
Japanese National Tax Agency also released a general tax treatment document related to NFT. In addition to listing the cases of vying for income tax on NFT, the guide also released cases of consumption tax and other situations. Because the acquisition and use of in-game tokens are very frequent and difficult to evaluate, they will be calculated uniformly at the end of the year.
5. Crypto exchange Kraken closes Abu Dhabi office.
Crypto exchange Kraken is shutting its Abu Dhabi office and winding down support for the United Arab Emirates’s local currency.
"As part of a recent review, we have decided to suspend AED (dirham) support," a Kraken spokesperson said to The Block. "All clients, including in MENA and the UAE, will continue to be able to use all of Kraken’s other products and services as normal."
Bloomberg first reported the news. The publication noted that a registry for Abu Dhabi Global Market no longer showed an active entity in Kraken's name. The exchange received a crypto license in Abu Dhabi in April 2022.
Kraken recently laid off around 30% of its global workforce. The pullback in the MENA region impacted eight members of staff, a spokesperson said.
Benjamin Ampen, managing director for MENA, will stay with the exchange, according to Bloomberg.
"We have already notified impacted clients of this recent change, and our best-in-class client support teams continue to offer our services to ensure a smooth trading experience," a Kraken spokesperson said.
Both Kraken and Coinbase also shut down operations in Japan recently. Kraken is one several crypto exchanges implementing layoffs as a cost-cutting measure.
