News Updates July 14, 2022
1. Bitcoin Reclaims $20,000 Despite High Inflation Numbers, Here's Why
Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of U.Today. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.
Following the expectation that inflation data will be released, the markets once again received a signal of the upcoming tightening of the monetary policy, which directly affects the performance of cryptocurrencies and digital assets on the market. But the reaction we saw is not as bad as the majority of analysts expected.
Read more on U.Today https://u.today/bitcoin-reclaims-20000-despite-high-inflation-numbers-heres-why
*Why didn't Bitcoin crash?*
The main reason behind the lack of downwards volatility could be the fact that the market had already priced in a negative scenario with CPI, hence avoiding any unexpectedly high volatility movement.
Read more on U.Today https://u.today/bitcoin-reclaims-20000-despite-high-inflation-numbers-heres-why
Whenever the absolute majority of market participants anticipate a certain event that should affect the market, they simply price it in advance, which is why almost nothing happens when an event passes. Sometimes traders refer to this general rule with the saying, "buy the rumor, sell the news."
2. 3 Reasons Why Bitcoin Survived Inflation Sell-Off: Crypto Market Review, July 14.
The most surprising thing on the market we have seen on the market this week is Bitcoin's reaction to previously released inflation data. It did not have the expected effect on the cryptocurrency market or on Bitcoin itself. The main reason behind the lack of downward volatility on Bitcoin is the fact that the market had already priced the scenario at which CPI inflation data would be higher than the industry's consensus on it. Buy the rumor, sell the news Historically, Bitcoin always had a tendency to move irrationally relative to events happening around the industry. It is mostly tied to the fact that traders and investors act before something that they expect to happen, happens. By acting in advance, they leveled the potential outcome of the unexpectedly high inflation data, which negatively affects the cryptocurrency market in general. In contrast to the previous CPI data release, the market was more than ready to take a hit.
3. India's Crypto Industry Advocacy Body Is Disbanded by Parent: Sources
The Blockchain and Crypto Assets Council was the only body representing the interests of India's crypto industry.
The Blockchain and Crypto Assets Council (BACC), the only advocacy body representing the interests of India's crypto industry, has been disbanded by its parent, according to three people with knowledge of the decision.
The Internet and Mobile Association of India (IAMAI) took the decision without discussion with the BACC, the people said.
Reasons for the decision included a lack of maturity among crypto founders when dealing with government, inaction around critical matters despite prompting by India's parliamentary finance body, and the creation of a counterproductive environment, a person with knowledge of internal consultations said. The IAMAI felt it was risking a reputation and credibility earned over years of working with new industries and it was time the crypto industry recognized it needed to change its approach, a person familiar with the exchanges between industry and the body said
The move is another blow in a series of setbacks to India's crypto industry, which has been hit by stiff taxes, payment processors cutting off exchanges, trading volumes crashing and a global bear market.
"It is unfortunate that this has happened when things have become difficult," an industry source said.
The move was announced as a "collective decision" in a video conference call with industry stakeholders and representatives of crypto exchanges.
We were told that the IAMAI has distanced itself from advocacy for crypto exchanges," one of the people said.
As for what the decision meant for the industry, "we did not get a straight answer," the person said.
Differences had emerged within the IAMAI and some members of the BACC on how to react to the imposition of stiff taxes on crypto trading. Some industry participants felt a legal challenge was the best way forward, a view that was not supported by the IAMAI.
Representatives have not yet had a conversation about whether a new body will be formed to advocate for the industry.
4. Brazilian Congress Postpones Crypto Bill Vote Until After October Presidential Elections
Deputies were originally scheduled to consider the text this week, which has already been approved by the Senate.
* This article is adapted from CoinDesk Brasil, a partnership between CoinDesk and InfoMoney, one of Brazil's leading financial news publications. Follow CoinDesk Brasil
* The Brazilian Chamber of Deputies postponed voting on a crypto bill until after the presidential elections in October, sources close to the matter told CoinDesk.
* Deputies were going to consider the crypto bill before the congressional recess, starting next week, but the treatment of a budget guidelines law and a proposed constitutional reform for the medical sector have dominated the legislative agenda.
* In April, the Senate approved the bill, which regulates crypto transactions and creates the label "virtual service providers" for crypto companies.
* The Chamber of Deputies, for its part, has not reached a consensus on a final text as Congressman Expedito Netto (PSD-RO), in charge of presenting the bill in the lower house, removed two articles from the Senate’s original bill. The first removed article required exchanges to keep their assets separate from those of customers, while the second demanded exchanges to already have an EIN in Brazil in order to apply for a license.
* ABCripto, the association that gathers local exchanges, asked the Chamber of Deputies to preserve those two original articles; meanwhile, foreign companies such as Binance and Bitso welcomed Netto’s proposed changes.
- The first round of Brazil's presidential elections will take place Oct. 2, in which former president Lula da Silva is the frontrunner, according to the latest polls. A run-off would take place on October 30.
5. EU Regulator Warns About Crypto — Questions Whether Many Will Survive
European Securities and Markets Authority (ESMA) Chair Verena Ross says that the crypto market crash should be a “cautionary lesson” for investors. She noted that there is a “real question” about whether many crypto assets will survive.
*ESMA Chair on Crypto Risks and Regulation*
Verena Ross, chair of the European Securities and Markets Authority (ESMA), has cautioned investors about cryptocurrency investing after the crypto market lost 70% of its value, the Financial Times reported Sunday.
Emphasizing that there was no prospect of a European bailout for out-of-pocket crypto investors, she said:
ESMA will be responsible for licensing crypto asset service providers as recently agreed in Brussels as part of the provisional agreement on the Markets in Crypto-Assets (MiCA) proposal. The deal will enter into force from mid-2023 and has an 18-month implementation period.
The regulator will have the power to ban or restrict crypto platforms if they are seen to not properly protect investors, or threaten market integrity or financial stability.
Ross expressed concerns about small investors losing money, citing that the global crypto market has shrunk by more than 70% in the past year. In May, cryptocurrency terra (LUNA) and stablecoin terrausd (UST) collapsed, wiping out many investors. She opined:
The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, warned in May after the collapse of LUNA and UST that many crypto tokens will fail.
The ESMA chair continued: “I hope that some of these investors will see this and will take a cautionary lesson at least to think about how much of their money they invest in these kinds of assets.”
In March, ESMA and other leading European financial regulators warned consumers that “many crypto assets are highly risky and speculative,” noting that investors “face the very real possibility of losing all their invested money if they buy these assets.”
Last month, the president of the European Central Bank (ECB), Christine Lagarde, warned that crypto assets and decentralized finance (defi) could pose financial stability risks. “This would be particularly the case if the rapid growth of crypto-asset markets and services continue … and the interconnectedness with both the traditional financial sector and the broader economy is intensified,” she stressed.
On Monday, the Financial Stability Board (FSB) announced that it will deliver a report outlining a robust regulatory framework for crypto assets to the G20 finance ministers and central bank governors in October.
6. UN Says Developing Nations Should Ban Bitcoin Ads, Regulate Crypto Wallets
The UN believes crypto could threaten the monetary sovereignty of developing nations, and it's recommending strict rules to curtail their use.
A recently published policy brief from the United Nations recommended developing nations take action against crypto, warning of risks associated with leaving the industry unregulated.
In the document titled “All that glitters is not gold,” first published in June, the United Nations Conference on Trade and Development (UNCTAD) stated the disadvantages posed to these nations by cryptocurrencies far outweigh the benefits they may bring to individuals and financial institutions. And the document goes as far as to suggest developing nations require the mandatory registration of all crypto wallets and ban advertisements related to cryptocurrencies.
This is not about approving or disapproving [of crypto] but pointing out that there are social risks and costs associated with cryptocurrency,” Penelope Hawkins, an economist and senior economic affairs officer at UNCTAD told Decrypt. “This is a recommendation that applies to any speculative or high-risk financial products where returns are uncertain.”
The intergovernmental organization cautioned cryptocurrencies could threaten the financial stability of developing nations, enable illicit financial activity, prevent authorities from limiting the flow of capital, and also jeopardize the monetary sovereignty of nations by unofficially replacing domestic currencies.
The brief recommended governments “make the use of cryptocurrencies less attractive” by imposing taxes on transactions using the technology and requiring the mandatory registration of digital wallets and cryptocurrency exchanges. It also put forth the idea of banning financial institutions from holding digital assets and preventing them from offering crypto-related services to clients.
Developing nations should restrict or prohibit advertising from crypto companies in public places or on social media platforms, the conference proposed as well, claiming it’s an “urgent need in terms of consumer protection in countries with low levels of financial literacy” that could lead to “significant losses,” according to the policy brief.
Rohan Grey, a law professor at the Willamette University College of Law, has worked as a consultant for the United Nations on digital currencies and said the lack of regulation regarding cryptocurrencies has a documented history of hurting consumers by enabling fraud and scams.
“The ecosystem is not fully ripe and mature,” he told Decrypt. “Allowing [the industry] to aggressively market itself would be like having a new kind of drug that hasn't even gone through the FDA process trumpeting itself as solving cancer.”
7. China’s messaging app WeChat seeks to ban misleading crypto promotion.
Following China’s most popular instant messaging and calling app WeChat banning all cryptocurrency-related accounts in the midst of the Chinese government’s crypto crackdown, the messaging app is now seeking to ban any form of misleading crypto claims on its platform.
Indeed, WeChat is demanding a ban on the promotion of money-making, high-yield financial fraud schemes, and related exaggerated cryptocurrency descriptions and guarantees in the accounts’ names, crypto reporter Colin Wu said on July 13.
According to the company’s announcement on July 13, it was acting “in accordance with the People’s Bank of China’s Implementation Measures for the Protection of Financial Consumers’ Rights and Interests, the Notice on Further Regulating Financial Marketing and Publicity”, and other relevant regulations.”
Among other decisions, users are no longer allowed to promote “diversion fraud projects” that don’t specify the daily or annualized income, nor can they advertise “high-yield wealth management fraudulent content,” or recommend fraudulent stocks.
8. Philippines’ digital transformation could make it a new crypto hub
The archipelagic country of the the Philippines is exploring blockchain use cases across different industry verticals.
ANALYSIS
Binance, the cryptocurrency exchange, has recently acquired a virtual asset service provider (VASP) license from the Bank of Spain in order to operate in the country. In its ambitious expansion plans that the cryptocurrency exchange is persisting despite the global jump and market slump in the cryptoverse, there is another country that Binance is looking toward — the Philippines.
In June, the CEO of Binance, Changpeng Zhao, stated in a press briefing in Manila that the exchange is looking to obtain a VASP license in the Philippines. In addition to the VASP, Binance wants to get an e-money issuer license from the central bank of the country, Bangko Sentral ng Pilipinas (BSP). While the former license would allow the platform to offer trading services for crypto assets and the conversion of these assets to the Philippines, the latter will allow it to issue electronic money.
The Philippines is the world’s 36th largest economy in the world by nominal GDP and the third-largest in Asia, according to data from the World Bank. Despite its small size, the country is considered to be one of the fastest-growing economies in the world due to it being newly industrialized, thus marking a distinctive shift from agriculture to services and manufacturing.
