News Updates July 12, 2022

1. Bitcoin is back below $20,000 and seems on track to re-test the bottom of its current range. The cryptocurrency was showing signs of recovery, but it was rejected near the critical resistance zone at around $22,000. At the time of writing, BTC’s price trades at $19,800 with a 3% and 2% loss in the last 24 hours and 7 days respectively. 

In a recent market update, trading desk QCP Capital addressed the factor that might contribute to BTC’s price moving sideways for the foreseeable future. These included the upcoming Mt. Gox redemptions, and global inflation.

On the probability of the Mt. Gox repayments negatively impacting Bitcoin and the crypto market, QCP Capital wrote:

It is impossible to be certain about the exact impact, given the numerous cross-arguments and theories surrounding the release. Our main takeaway is that there is a high chance of BTC supply flooding the market soon.
In the best-case scenario, Bitcoin will face downside pressure allowing Ethereum and other altcoins to gain some breathing room. The sector might record some gains after an extended period of increased Bitcoin dominance.

2. Bitcoin $20,000 Support Breached, But There Are 3 More Important Levels to Watch: Crypto Market Review, July 12. The major $20,000 support was breached as bears have finally pushed the price of the first cryptocurrency back to the level we saw at the beginning of the month. But despite the strong drop, both altcoins and Bitcoin have other important levels to watch out for. Technical support levels Ahead of inflation data, technical analysis remains the only tool for predicting the short-term movement of Bitcoin on the market. The first support level stays at around the $18,800 price range since it was the price that acted as a trampoline for BTC that bounced off it two times after the 40% drop. Another support line that we are able to see on shorter timeframes like four hours is a local trendline, which has acted as a guideline for Bitcoin's price since the beginning of the month. Just now, we saw the third successfully bounce from the trendline support located at $19,428.
The third important level for Bitcoin would be the local low we saw back on June 18, when the price of the first cryptocurrency crashed below $18,000 and reached $17,592.

3. France Starts Second Stage of Wholesale CBDC Experiments, Central Bank Governor Says

Banque de France head François Villeroy de Galhau said the work ensures that France stands ready to bring central bank money as a settlement asset as early as 2023

The French central bank, Banque de France, wants a working wholesale central bank digital currency (CBDC) ready to go as early as 2023, according to the bank's governor, François Villeroy de Galhau.
Galhau announced on Tuesday that the bank has kicked off the second phase of experimentation into a wholesale CBDC, which could be used to streamline domestic and cross-border transactions between banks. CBDCs are digital versions of a jurisdiction's sovereign currency which, in France's case, is the euro.

We want to get closer to a viable prototype, testing it in practice with more private actors and more foreign central banks in the second half of 2022 and in 2023," Galhau said during a speech at the 2022 Paris Europlace International Financial Forum on Tuesday.
"This work ensures that we stand ready to bring central bank money as a settlement asset as early as 2023," Galhau said.

Banque de France, which began experiments on a wholesale CBDC in March 2020, wrapped up its first stage of experimentation in December 2021. Galhau said on Tuesday that the first stage included nine experiments run hand in hand with the private sector and "other public actors."
Central banks are increasingly exploring wholesale CBDCs that are built on distributed ledger technology (DLT) and promise to help speed up interbank settlements.

The Bank for International Settlements (BIS), an association of central banks from around the world, has a number of ongoing experiments with central banks across Asia and Europe that are testing wholesale CBDCs for a variety of use cases, including cross-border payments. The BIS Innovation Hub's Project Jura explores the direct transfer of euro and Swiss-franc wholesale CBDCs between French and Swiss commercial banks.

4. Bank Indonesia Governor says country is actively exploring crypto assets

Indonesia’s central bank governor Doni Primanto Joewono has confirmed that the country is exploring the possibility of integrating cryptocurrencies into its financial system. 

Joewono revealed that Bank Indonesia is now part of global institutions that are researching the possibility of rolling out a central bank digital currency (CBDC) to meet different needs, Tempo reported on July 12.  

According to Joewon, the emergence of cryptocurrencies has acted as a trigger for several countries to look into the viability of CBDCs. However, he warned that cryptocurrencies can pose risks to existing financial systems.

The governor who was speaking on the sidelines of the G20 summit also noted that cryptocurrencies harbour qualities that can be beneficial to the current financial system like enhancing efficiency and inclusion.

 *Indonesia’s crypto regulations*

Despite Joewono indicating a friendly approach to cryptocurrencies, the country has previously implemented strict laws towards the sector.

Early this year, Indonesia’s Financial Services Authority (OJK) warned that financial firms in the country are barred from offering and facilitating sales of cryptocurrencies. 

The agency cited the protection of consumers stating that cryptocurrencies are a high risk. Notably, the warning emerged as Bitcoin experienced significant popularity amid a wider crypto market bull run. 

Additionally, the country also implemented a value-added tax (VAT) on cryptocurrency transactions and an income tax on capital gains from related investments. Finbold reported that the taxation regime is part of Indonesia’s attempt to improve revenue collection following the economic impact of the Covid-19 pandemic.

5. Policy Makers Should Get On With Regulating Crypto, BOE’s Cunliffe Says

The Bank of England’s deputy governor said regulators should accelerate crypto rulemaking. If certain risks involving crypto can’t be managed, related activities must be stopped.

Regulators should accelerate their work on setting up effective rules for crypto, Bank of England Deputy Governor Jon Cunliffe said.
“The lesson we should not take from this episode is that ‘crypto’ is somehow ‘over’ and we do not need to be concerned about it anymore,” Cunliffe said, according to text of a speech he gave at the British High Commission in Singapore on Tuesday, referring to the market decline some are calling a "crypto winter."

There has been “a dramatic bout of instability and losses in crypto markets,” Cunliffe said, with around $2 trillion wiped out of crypto markets in recent months. The meltdown has been exacerbated by the collapse of multibillion-dollar stablecoin issuer Terra and other participants including crypto lender Celsius and the Three Arrows Capital hedge fund.
Technology does not change the underlying risks in economics and finance, he said.

Crypto technologies offer the prospect of substantive innovation and improvement in finance. But to be successful, sustainable innovation has to happen within a framework in which risks are managed. People don’t fly for long in unsafe airplanes.”
In light of recent events, international regulators are showing signs they are speeding up global crypto rules. The Basel Committee on Banking Supervision, the global standard setter for banking regulations, is getting ready to issue guidance on the prudential treatment of crypto assets held by banks. Meanwhile, international financial watchdog the Financial Stability Board is looking to propose crypto regulations by October.

The collapse of algorithmic stablecoin terraUSD (UST) may have also quickened rules for all stablecoins, including those pegged to the value of real assets like the U.S. dollar. In June, policymakers in the European Union agreed on a landmark crypto regulatory framework called the Markets in Crypto Assets package that focuses heavily on stablecoin regulation.

The U.K. government is coordinating its efforts to produce stablecoin regulation that could come out by August. The Treasury, the government's finance arm, has already released a consultation for governing stablecoins that could influence larger financial systems. Regulators in the U.K. – including the Bank of England – hope to issue a consultation document on the regulatory policy framework of stablecoins later this year, Cunliffe said.

He added that crypto regulations should follow the principle of “same risk, same regulatory outcome” meaning regulators should try to extend existing financial rules to mitigate similar risks involving crypto.
But when that fails, regulators may have to take stronger measures.
"If and when for certain crypto related activities this proves not to be possible, where we can find no way to mitigate and manage the risk to the extent necessary, that is to say to the extent such risk is managed in other parts of the financial system, we should not let activities proceed," Cunliffe said.

6. US trademark and copyright offices to study IP impact of NFTs

The U.S. Patent and Trademark, and Copyright offices will explore the impact of NFTs on intellectual property rights as lawsuits begin to stack up.

As nonfungible tokens (NFTs) continue to garner interest, the United States Patent and Trademark Office and U.S. Copyright Office are set to launch a study into their impact on intellectual property rights.

The examination of NFTs comes after a request from Senators Patrick Leahy and Thom Tillis in June for a deep dive into the potential ramifications the burgeoning asset class could have in regard to intellectual property rights.

The two departments have agreed to conduct the study in correspondence with Leahy and Tillis, conducting preliminary discussions to plot a plan of action tha will include consultations with various stakeholders well-versed in the NFT landscape.

A broad range of topics, which were initially raised by the Vermont and North Carolina senators, will be considered. This includes potential intellectual property challenges with future applications of NFTs, the rights associated with transferring ownership of an NFT, licensing rights and infringements and the potential IP rights given to NFT creators.

Cointelegraph has reached out to both departments to ascertain how long the study will take to be completed, the scope of its coverage and which industry stakeholders will be consulted. They did not respond immediately.

 *Wave of litigation’ to hit NFT space as copyright issues abound*

The NFT space has already caused plenty of strife for companies that have seen their products or intellectual property infringed upon in recent months. A number of high-profile brands have sought legal recourse against NFT marketplaces and platforms that may have infringed on associated IP rights.

Global sportswear brand Nike made headlines in February as it instituted court proceedings against online reseller StockX for infringing on its trademark through the sale of unlicensed sneaker NFTs. The company had sold Nike NFT sneakers that were set to include redeemable, real-world versions of the shoes.

American rapper Lil Yachty is fighting his own legal battle in California, after filing a trademark infringement lawsuit against two music companies. The 24-year-old claimed the firms used his likeness and name to raise more than $6.5 million in venture capital to bankroll the launch of a collection of NFTs.

Production company Miramax also went the legal route in November 2021 after critically-acclaimed film director Quentin Tarantino looked to launch NFTs derived from his blockbuster 1994 film Pulp Fiction. The studio claimed Tarantino infringed on copyrights as he set out to launch an NFT collection featuring seven uncut screenplay scenes, exclusive commentary and original handwritten scripts.

7. Bank of Russia opposes private stablecoins in the country

Russia's central bank sees the digital ruble as the only technological payment option to support.

In a fresh episode of the longstanding battle between the Central Bank of Russia (CBR) and the country's Ministry of Finance, representatives of the former have criticized the latter’s idea of supporting the stablecoins, which some private investors have sought to launch in the country. 

According to local media, an unnamed representative of the central bank dismissed talk of Russia-based stablecoins, started last week by the Ministry of Finance’s director of financial policy department Ivan Chebeskov.

Back then, Chebeskov voiced his ministry’s support for creating stablecoins tied to assets like “the ruble, gold, oil or grain”. He called it “the right path for developing new technology” and urged private companies to try this kind of financial tool if they find it necessary.

The CBR speaker said that private stablecoins “are characterized by higher risks,” because the pool of underlying assets doesn’t belong to the issuer. They also stated that there is no guarantee of redemption at par by the issuer and the price of stablecoin isn’t really stable

 *Russian bank Sber to complete its first digital currency deal*

In a line with the traditional CBR message, the bank's rep noted that the ruble remains the only legal payment method in the country, and stated their belief in the digital ruble, “combining all the advantages of digital payments and the reliability of national currency.” As local industry experts sometimes emphasize, the central bank digital currency project lies at the heart of the CBR’s suspicion towards all the private cryptocurrencies.

On June 29, the head of the CBR’s department of financial technologies, Kirill Pronin, acknowledged the possibility of crypto mining legalization under certain conditions, namely the export of all the mined assets to foreign exchanges. The Ministry of Finance’s Ivan Chebeskov didn’t miss a chance to disagree, noting that the current geopolitical challenges for Russian miners who want to sell their crypto abroad.

8. US Dollar Reaches Parity with Euro as DXY Breaks Through Resistance.

The U.S. dollar appears to be the biggest beneficiary of global financial instability, pervasive inflation, the war in Ukraine and the coming recession.

The dollar has regained currency parity with the euro after 20 years. The European currency is at its weakest almost since its inception. Thus, the U.S. Dollar Index (DXY), or the strength of the USD against the world’s six largest currencies, is today recording 20-year peaks.

  

 
IN BRIEF
The U.S. dollar has reached, for the first time in 20 years, parity with the euro.
At the same time, the U.S. Dollar Index (DXY) has broken out of the resistance area and is heading for 20-year highs.
The BTC bull market has historically started after the end of the DXY increases.
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The U.S. dollar appears to be the biggest beneficiary of global financial instability, pervasive inflation, the war in Ukraine and the coming recession.

The dollar has regained currency parity with the euro after 20 years. The European currency is at its weakest almost since its inception. Thus, the U.S. Dollar Index (DXY), or the strength of the USD against the world’s six largest currencies, is today recording 20-year peaks.

Historical analysis shows that a strong dollar has almost always been correlated with a weak Bitcoin (BTC) and bearish sentiment in the entire cryptocurrency market. The situation is no different today, when, with the USD at record highs, Bitcoin is trying to find a bottom near $20,000.

Dollar regains parity with euro
The U.S. dollar rose by 4.75% against the euro in July. Since the Jan 2021 low, it is already up 23% in a year and a half.

The last time parity between the two currencies appeared was at the end of 2002, when the euro began to be introduced into cash circulation (blue circle). Since 

then, the EUR 0.95-0.96 range has steadily acted as resistance (red) in 2015 and 2017.

This month, however, the U.S. dollar has decisively broken out above this resistance. At the press time, it is priced almost exactly at EUR 1.

8. Sri Lanka’s central banks says crypto remains illegal amid economic turmoil.

Amid the ongoing financial turmoil in Sri Lanka that has seen the nation run out of cash, cryptocurrencies have been fronted as a possible solution to rescue the country. However, the Central Bank of Sri Lanka (CBSL) has clarified that there is no authorisation to roll out different crypto products. 

 
In a press release on July 12, the CBSL maintained that cryptocurrencies are outlawed while noting that it has not approved any Initial Coin Offerings (ICO), mining operations or crypto exchange services. 

The institution added that cryptocurrency payments are also outlawed and banned in the country. According to the CBSL, digital currencies lack regulatory oversight hence they cannot be used.

“The public is, therefore, warned of the possible exposure to significant financial, operational, legal and security-related risks as well as customer protection concerns posed to the users by investments in Virtual Currencies (VCs). The public is also warned not to fall prey to various types of VC schemes offered through the Internet as well as other forms of media,” the bank said.