News updates March 23, 2022

1. Breaking: Thailand Bans Payments Through Crypto:

Thailand’s Securities and Exchange Commission (SEC) on Wednesday issued orders banning the use of digital assets in payments for goods and services. The ban will be effective from April 1.

The move is in line with the Thai Government’s stance against crypto payments. The Bank of Thailand has repeatedly insisted that it does not support the medium as legal tender. The ban also comes as a follow-up to recent comments from the SEC that it would look into regulating the use of  tokens in purchasing goods and services.

Ban to protect financial stability in Thailand
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The SEC said crypto payments could dent Thailand’s economic stability. This stance is likely motivated by the large amount of volatility seen in the crypto market recently, which makes the medium somewhat unfeasible for use as tender.

Businesses that provide crypto payment services have up to 30 days to comply with the rules, Reuters reported. The move is in line with most other countries’ approach to crypto, where it is approved as an investment vehicle, but not as legal tender.

Recently, Southeast Asian peer Indonesia also warned financial firms against facilitating crypto payments.  To date, El Salvador is the only country that has adopted crypto as legal tender.

Thailand still has crypto-friendly regulation
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Even with a ban on crypto as legal tender, the Thai Government still has laws to promote the use of crypto. Recently, the government scrapped a planned 15% tax on crypto investments, and instead exempted value-added-tax from transactions on certain crypto exchanges.

The government also allowed traders to offset annual losses against gains for taxes due on cryptocurrency investments. The moves come following a surge in crypto adoption in Southeast Asia’s second-largest economy.

Crypto data aggregator Chainalysis ranked Thailand as third in its index of countries leading DeFi adoption in 2021. It is also ranked 12th in the crypto aggregator’s 2021 global crypto adoption index.

2. S Korean Market Regulator Wants to Label Upbit, Bithumb ‘Large Conglomerates’:

South Korea’s biggest crypto exchanges are set to be regulated by the nation’s conglomerates regulator – a sign they have grown from relative obscurity into mega-companies in the space of just a few years. But the regulatory move would also ramp up scrutiny on what is already a heavily policed industry.

The Kookmin Ilbo reported that the Fair Trade Commission (FTC) is looking to classify Bithumb and Dunamu – the operator of the market-leading Upbit exchange – as “large conglomerate” firms, due to the fact that they represent a massive combined 90% of the national crypto market.

The FTC is set to officially announce its new classifications on May 1.

Classification as a “large business group” or “conglomerate” requires firms to abide by stricter regulatory compliance, and would entail closer scrutiny. South Korea’s business landscape is dominated by family-run business groups – the likes of Samsung, LG, CJ, Hyundai, and SK. Known as chaebol in South Korea, these business groups have been accused of wielding disproportionate amounts of power – and several governments have attempted to tackle this by breaking companies up and imposing strict regulations on the companies.

Large conglomerate” firms must abide by additional financial disclosure requirements, and must post regular reports on the status of their stock holdings.

Company directors and their family members are also obliged to abide by strict expropriation rules and the company must observe. Certain blocks are also placed on investment and cross-holding – whereby publicly-traded companies hold significant quantities of shares in other stock exchange-listed firms.

A wrinkle has presented itself, however. In order to prove that a company should be classified as a “large business group,” the FTC must prove that its total assets are worth some USD 4bn. However, the report pointed out that the FTC had counted client assets as well as exchange funds in its calculations.

Unnamed crypto industry officials were quoted as warning that further regulatory pressure would likely stifle growth.

And the results of the recent Presidential election could provide a further roadblock. President-Elect Yoon Suk-yeol has spoken in positive terms about the domestic crypto industry, and is minded to promote growth in the sector. Yoon will be sworn in on May 10 – just nine days after the FTC announces its decision.

But the prospect of running into bother with a new President may be off-putting for the FTC, particularly as Yoon (who met with Bithumb and Upbit officials prior to the election) wants “to increase the crypto market’s size by applying market-friendly policies” and taking a softer regulatory touch “on the crypto market,” Kookmin Ilbo noted.

Bithumb was founded in 2014 and Upbit in 2017. The former has recently unveiled plans to expand into the metaverse with a subsidiary named Bithumb Meta, while Upbit’s blockchain subsidiary Lambda256 recently raised some USD 60m in a Series B funding round that reportedly valued the company at over USD 300m.

3. BITCOIN IMPROVEMENT PROPOSAL 21 EASES USER EXPERIENCE WHEN PAYING INVOICES:

Different Bitcoin wallets have multiple options for whether to send an on-chain or a lightning payment which can be confusing to inexperienced users.

One of the more illuminating talks at the Bitcoin Takeover event that was held at the Bitcoin Commons here in Austin last Friday was a panel discussion between Lisa Neigut (c-lightning, Blockstream), Rockstar Dev (Strike, which uses lnd), and Miles Suter (Cash App, which uses LDK) led by Matt Odell about the challenges of the interoperability between different implementations and overall UX when using the Lightning Network. During the discussion (which should be made public soon) the panel turned to the topic of BIP21, a BIP that I was unaware of but am very excited about after coming to understand it.

At the moment there is a massive UX hurdle that exists for users of different bitcoin wallet software providers. The UX around sending and receiving bitcoin transactions on-chain and via the Lightning Network. Some wallets are on-chain only, some are lighting only, and some allow users to use both but force you to manually shuffle between the two when sending and receiving. Enter BIP21, which aims to fix this UX hurdle by giving users optionality when sending. BIP21 would enable QR codes that enable wallet providers to include both a lightning invoice and an on-chain bitcoin wallet address in one place.

What is needed to push BIP21 forward as a standard is for more lightning network wallets to begin supporting it. Right now, when a bitcoin user using a BIP21 enabled wallet scans a QR code of a wallet that doesn't have BIP21 enabled they receive an error code that can be confusing and leads to UX friction. If more lightning network wallets enable BIP21 and allow users who are only sending transactions on-chain to be provided with a fallback on-chain address it would bring an end to this UX friction. The best part is that BIP21 is backwards compatible, so there is no way in which it could disenfranchise the man in the coma who wakes up a decade from now and broadcasts a transaction from a wallet he hasn't touched in many years.

Beyond this, BIP21 enables users the ability to make a conscious decision about whether they want to send via the protocol layer or the lightning network. If implemented, this should eliminate the need for different on-chain and LN UI tabs and make the transacting process much smoother between different wallets.

The first step toward realizing these benefits is making it so each wallet can read BIP21 QR codes. From there, each project can begin to create experiences that allow users to generate BIP21 payment codes. You must get wide support for scanning before it makes sense to get wide support for generating these payment codes. Here's to hoping wallet providers make this a priority in the near future.

4. Here’s Why Bitcoin (BTC) May Bounce To New All Time High Soon;

Bitcoin jumped to nearly $44,000 this week, amid increased institutional trading and as a large number of tokens were moved off exchanges. Recent data suggests that these outflows could herald more strength for the world’s largest cryptocurrency.

The token is up nearly 7% over the past seven days, with its latest bounce coming just after the U.S. Federal Reserve hiked interest rates as expected. A bulk of this strength has been attributed to institutional trading, with growing interest from major Wall Street firms.

Bitcoin has also managed to avoid the near-term weakness experienced by stocks, after the Fed said it would be more aggressive in its moves to curb inflation. As of Wednesday, it was trading around $42,000.

Recent outflows could signal more Bitcoin strength
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According to data from crypto researched Intotheblock, the token had its largest exchange outflow in over one month on Monday, with over 15,000 units being moved off exchanges. Historically, large outflows have always preceded a significant jump in the token’s price.

In late-January, the last time that over 14,000 tokens were moved off exchanges, Bitcoin’s price surged nearly 20% in a week to cross $44,000.

The case for a BTC bounce is bolstered by the fact that lower token supply usually makes for higher prices. And with a large amount of tokens being taken off active exchanges, BTC supply is bound to come down, supporting prices.

Crypto sentiment still on the ropes:
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Even with recent gains, sentiment towards the crypto market is largely constrained. The economic ructions from the Russia-Ukraine conflict are a key detractor of optimism, especially with inflation set to surge in their wake.

While Bitcoin dodged the initial market weakness from a hawkish Fed, it is eventually also expected to come under pressure from tighter monetary policy this year. The token has faltered at the $44,000 level several times this year, and has stuck to a tight range for a month.

5. El Salvador Postpones Planned Bitcoin Bond: Report:

The country's finance minister said the launch could be postponed to as late as September, according to Reuters.

* El Salvador has postponed its planned $1 billion bitcoin bond offering due to unfavorable market conditions, Finance Minister Alejandro Zelaya said on Tuesday on Salvadoran TV show "Frente a Frente."

* It had initially been scheduled to launch between March 15-20 but the Russia-Ukraine war and its impact on the price of bitcoin caused the government to change the date, according to Reuters.

* "I think this is not the time. There are some moves on the planet," Zelaya said, adding that he prefers the issuance to take place between March and April. "In May and June sometimes you can, but the market variables get different. After September, it is difficult to raise, unless you are previously funded, as in the case of bitcoin bond," he added.

* According to Zelaya, the bitcoin bond will have a "substantial oversubscription" that could reach $1.5 billion.

* In November 2021, President Nayib Bukele announced plans to build a “Bitcoin City” funded by the sale of the bonds, which have an annual coupon of 6.5%. Half the funds will be used to accumulate bitcoin (BTC), with the rest earmarked for infrastructure and bitcoin mining powered by geothermal energy.

* According to Zelaya, the bond will be issued not by the government but instead by the state-owned thermal energy company La Geo. It will have a sovereign guarantee provided by the Salvadoran state, he added.

UPDATE (March 22, 2022, 22:10 UTC): Added details and background in third and fourth bullet points.

UPDATE (March 23, 2022, 23:25 UTC): Added comments from Alejandro Zelaya.

6. US, EU, Or Asia? Here’s Which Of These Has Dominated Bitcoin Sell-Side Recently:

Latest Bitcoin data released by Glassnode sheds light on which of the three major markets (US, EU, and Asia) has been behind the recent selling pressure for the crypto.

Examining 30-Day Cumulative Bitcoin Price Trend During US, EU, And Asian Trading Hours:
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The latest weekly report from Glassnode comes with data highlighting the price change during the trading hours of the three major markets.

The metric in question measures the cumulative Bitcoin price change during the active trading hours of US/EU/Asia over the period of 30 days.

As the analytics firm explains it, “these metrics provide insight into which geographic areas of the market are leading, or lagging in buy and sell-side pressure, particularly in reaction to fundamental changes in market structure.”

Following March 2020, both the markets had been in a state of accumulation, until the 2021 bull rally neared where investors in both the hours participated in some heavy buying, with EU ramping up a bit later than US.

May-July consolidation saw heavy spending from US, but the market lead buying during July-August, and did considerably more buying than EU.

Asia also did some selling during May-July, but again the magnitude was lesser than the others. Interestingly, investors in these trading hours heavily bought the top during October-November.

Then during the drawdown that followed, Asia heavily dominated the sell-side pressure, and has since continued to spend moderately during recent months

BTC Price
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At the time of writing, Bitcoin’s price floats around $42.8k, up 11% in the past week. Below is a chart that shows the trend in the value of the crypto over the last five days.

7. Bitcoin worth $2.6 billion taken off exchanges in 15 days as bullish sentiments mount:

After Bitcoin (BTC) recently pushed through the $40,000 mark and has continued its multi-day rally upward, there’s been a substantial outflow of the popular digital asset from various crypto exchanges.

In a matter of only 15 days, around 61,000 Bitcoin has been taken off the exchanges, according to a chart by the on-chain analytics platform Glassnode, shared by Bitcoin Archive on March 22.

Based on the price of Bitcoin price at press time, the amount that left exchanges equates to roughly $2.6 billion.

Specifically, the amount of Bitcoin on these exchanges 15 days prior to the time of publication was around 2.57 million BTC, while at press time, the exchange wallets held almost 2.51 million BTC. 

15,000 BTC taken off exchanges in 24 hours 
Related
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 New York Assembly seeks to ban Bitcoin mining over environmental concerns
U.S. company resorts to using coal waste to mine Bitcoin and clean up their community
Only 11% of Ethereum in circulation is held on exchanges

Of the total amount of Bitcoin removed from the exchanges, as much as 15,000 BTC or around $638 million was taken off over the course of just one day, as per data from another crypto analytics company IntoTheBlock, shared that same day.

Canadian Purpose Bitcoin ETF holdings break records, while price advances
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As the bullish sentiment for BTC intensifies, the amount of holdings of the Canadian Purpose Bitcoin exchange-traded fund (ETF) recently reached an all-time high of 34,850 BTC. 

 
Notably, this breaks the previous record of 34,760 BTC, set on March 3, 2022, in keeping with Glassnode data tweeted by the market analyst Jan Wüstenfeld on March 22.

Finally, Bitcoin’s price at the time of publication stood at $42,556, demonstrating growth of 8.78% from seven days before when it traded under the crucial $40,000 mark at $39,120.

The market capitalization of the largest cryptocurrency in this sense was $807.90 billion, a growth of $64.77 billion over the course of just one week has been witnessed since then, CoinMarketCap data shows.

8. Abu Dhabi Global Market to Permit Licensed Exchanges Trade NFTs

The Abu Dhabi Global Market (ADGM) is building out a regulatory framework that may make trading platforms or exchanges that have licenses to operate within the free trade zone to trade Non-Fungible Tokens (NFTs).

The Emirati free trade zone published a consultation paper earlier this week titled “Proposals for enhancements to capital markets and virtual assets in ADGM,” which amongst other things covers NFTs.

9. Ireland’s central bank follows UK's example in warning of crypto advertisements

The Central Bank of Ireland issued a warning to consumers about the risks around crypto investments in addition to “misleading” advertisements, including those pushed by influencers on social media.

In a Tuesday notice, Ireland’s central bank said the warning was part of a campaign organized by the European Supervisory Authorities, made up of the European Securities and Markets Authority, the European Banking Authority, and the European Insurance and Occupational Pensions Authority. The Central Bank of Ireland said that cryptocurrencies were “highly risky and speculative” for retail investors and warned people to be mindful of “the risks of misleading advertisements, particularly on social media, where influencers are being paid to advertise crypto assets.”

10. Amazon Has Launched its Metaverse Game, Will Cryptocurrencies Follow

Amazon has launched a 3D web game where players navigate a virtual city, while helping people solve real tech problems through the cloud. It is an education tool (and sales tool) to teach people how to use its cloud services.

This is Amazon's first attempt at entering the virtual world of the Metaverse.

11. Argentines prefer “play-to-earn” crypto games over normal jobs amid record inflation

Argentina has become the top country for “play-to-earn” crypto games in Latin America, which now makes up 25% of the users on such gaming platforms.

The country, which is South America’s second-largest economy, is now ranked fifth around the world in terms of users on so-called “play-to-earn” crypto gaming platforms. Argentina-based visits to Decentral Games, which has the largest userbase in the world, have hit 9,400 since the beginning of 2022, compared to only a few hundred visits over the entirety of 2021.