News Updates November 02, 2022
1. Bitcoin price hits $20.8K as volatility ensues over Fed 75-point rate hike
The Fed acted as expected, with comments from Chair Jerome Powell still to come as BTC/USD wakes up. Bitcoin $20,159 saw instant volatility on Nov. 2 as the United States Federal Reserve enacted a fourth consecutive 0.75% interest rate hike.
Fed hints more hikes to come
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD initially dropping to $20,200 before momentarily rebounding to $20,800.
The Fed confirmed the 0.75% hike, which marks its most intensive hiking schedule in forty years, in a statement shared on behalf of the Federal Open Market Committee.
“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 3-3/4 to 4 percent,” the Fed stated, adding:
“The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”
How long can the hikes go on?
Should Powell hint at possible slower increases or a pivot in policy, the situation could, however, turn dramatically.
“The market rallying ~13% off the lows was this expected 75 bps. It’s all about the presser now,” popular market analysis account CryptoISO summarized, adding:
“We knew the fed had telegraphed an eventual slowdown/pause. Not a pivot but more of a reassessment as data comes out to see how it is flowing through. 75 bps each time wont work.”
2. It’s Make-or-Break Time for Bitcoin As BTC Has One Last Chance To Show Strength, According to Top Analyst.
A closely followed crypto strategist is issuing an alert that it’s “do-or-die” time for king crypto Bitcoin (BTC).
The pseudonymous analyst Cred says that Bitcoin is currently trading in a wide range between $18,000 and $22,000, with a midpoint at around $20,300.
According to Cred, Bitcoin’s recent rally has allowed the king crypto to break above the range midpoint. However, he’s concerned that Bitcoin is spending a lot of time just slightly above $20,300, indicating that BTC bulls are having difficulty sustaining the surge.
“I’m not immediately a fan of the market just coming back, getting stuck at the larger timeframe range midpoint ($20,300), spiking the high ($21,000) and then all the way back to retest the breakout ($20,300). The best breakouts are the ones that just break and go. In this case, it’s slowed down at an area where I wasn’t expecting it to slow down… There’s no real-time, space or distance built between the breakout and the retest. I’m not generally a fan of those types of structures.”
According to Cred, Bitcoin is in big trouble if it closes below the $20,300 price area on the daily timeframe. The crypto strategist highlights that if the king crypto corrects below the key price area, Bitcoin’s market structure turns bearish as the recent rally will likely be seen as a huge trap set for BTC bulls.
“[The move above $20,300] becomes the failed breakout or deviation. If the market closes through here ($20,200) and that is accepted back below the range boundary, [price action above $20,300] this ends up being your excess or deviation and then you target the other side of the range, which in this case would be the range low at $18,000 or $19,000.“
Cred says that while the $18,000 range has offered decent support for BTC over the last few months, he believes that the demand area will likely no longer hold in case Bitcoin witnesses another sell-off event.
“My personal view is that given how much time we’ve spent at this range low ($18,000)… We’ve spent all the time in the world bouncing off of $19,000 or thereabouts. I’m not sure that level would survive another test on the back of a high timeframe failed [breakout]… This ($23,000) is a do-or-die area.”
At time of writing, Bitcoin is swapping hands for $20,500, flat on the day.
3. New ‘crypto token regime’ instituted at the Dubai International Financial Centre
The emirate’s free trade zone has its own legal system and courts. Now its crypto regulations have been augmented and extended to all tokens recognized in the zone.
The Dubai Financial Services Authority (DFSA) announced on Nov. 1 that its crypto token regime has come into force in the Dubai International Financial Centre (DIFC) special economic zone, with a six-month transition period. The new regime is the DFSA’s second round of regulations, building on the “Regulation of Investment Tokens” introduced at the DIFC in October 2021.
The #DFSA has issued regulations on #CryptoTokens for clients wishing to make use of this new asset class.
This broadens the range of virtual asset regimes available the Centre, building on the #InvestmentTokens regulations announced in Oct. 2021. pic.twitter.com/OJX7frlVqc
— DIFC (@DIFC) November 1, 2022
Crypto tokens are understood to be any token besides the previously defined investment tokens, with the exception of utility tokens, nonfungible tokens, central bank digital currencies, privacy tokens and algorithmic tokens. Tokens must be recognized by the DFSA to be used in the DIFC, following an established application process. Stablecoins, or “fiat crypto tokens,” are subject to additional requirements.
The new regime addresses Anti-Money Laundering and Countering the Financing of Terrorism, as well as consumer protection, market integrity, custody and financial resources for service providers. The regulations were first described in a consultative paper in March. That paper underwent an extensive comments process.
DFSA chief executive Ian Johnston said:
“Our work to develop a comprehensive Crypto Token regime has taken into account feedback from a broad range of stakeholders. It aims to strike a balance between encouraging innovation in the DIFC and protecting the consumers of these financial products.”
The Dubai Virtual Asset Regulatory Authority was set up in March to oversee virtual assets in the rest of the emirate, including its other free trade zones, such as the Dubai Multi Commodities Centre. It has licensed several crypto-related firms and opened a headquarters in The Sandbox metaverse world.
4. India Considers Taxing Crypto Income From Businesses Headquartered Elsewhere
The government has invited comments on the draft from stakeholders and the general public
India’s taxation authority has proposed new changes to the filing of income tax returns that could have a significant impact on those holding virtual digital assets (VDA) or cryptocurrencies or possibly even investments in decentralized autonomous organizations (DAO).
The Central Board of Direct Taxes (CBDT) has proposed a new common tax return (ITR), which largely consolidates existing income tax returns to make it a smoother process. But the proposal also seeks information from Indians residing abroad about any business connections they may have in India, and whether that entity has a significant economic presence (SEP) in India – particularly businesses from which they draw income.
This may have an impact on any crypto exchanges that are not incorporated in India but still have Indian traders, said Rajat Mittal, a tax counsel in India's Supreme Court advising crypto businesses.
"A lot of Indian customers are on these exchanges, and this might result in Significant Economic Presence (SEP) for these exchanges. If these exchanges have SEP in India, they might be required to discharge the equalization levy," he said.
The equalization levy, which is essentially a foreign company operating tax, was introduced in 2016 with the intention of taxing digital transactions or income that foreign e-commerce companies made from India.
5. Hong Kong’s New Crypto Initiatives. Can It Be A Doorway For Chinese Investors?
Hong Kong is the most recent location to announce intentions to introduce a cryptocurrency exchange-traded fund (ETF) that would target popular cryptocurrencies like Bitcoin (BTC).
Leung Fung Yee, the Hong Kong Securities and Futures Commission (SFC) CEO, stated that the organization had been actively trying to design a procedure to license the ETF. As cryptocurrencies become more widely accepted, many governments seek to provide similar products in response to growing investor demand. The commission emphasized that the mechanism's primary goal is implementing the proper legislation to regulate the ETF. Yee claimed that even if the cryptocurrency industry has difficulties, including excessive volatility, the decision to consider an ETF was made after the initial worries about the sector were tolerable.
Yee said that the ETF products would be subject to additional restrictions, including investor education and disclosure of investment methods by their management companies. The SFC said in a statement that it would hold a public consultation session to discuss ways to grant access to cryptocurrencies to retail investors.
Hong Kong will be open to the idea of having Exchange Traded Funds (ETFs) on virtual assets in our market, the Securities and Futures Commission (SFC) announced. "The Securities and Futures Commission will be conducting a public consultation on how retail investors may be given a suitable degree of access to VA (virtual assets)," SFC said.
Hong Kong on the spotlight again recently after acquiring CBDCs
The Aurum retail central bank digital currency (CBDC) prototype was finished and presented by the Hong Kong Monetary Authority on October 21. The system's distinctive structure, created in collaboration with the Bank for International Settlements (BIS) Innovation Hub, reflects the complexity of Hong Kong's current monetary system.
A retail e-wallet and wholesale interbank system make up Aurum. The e-wallet has a smartphone interface and is produced at a nearby bank. A validator system avoids user duplicate redemption and bank overissuance.
In e-wallets and the interbank system, intermediated retail CBDC and stablecoins backed by CBDC are used. With the peculiar CBDC-backed stablecoins, Hong Kong's current monetary system, in which bank notes are produced by three financial institutions and supported by the central bank, is digitally mirrored. While the stablecoins are liabilities of the issuing bank, the CBDC is a direct liability of the central bank.
6.Zimbabwe Learns Lesson From Nigeria’s eNaira for Its CBDC Plans.
When it comes to introducing a cryptocurrency plan for its own central bank digital currency, Zimbabwe is learning lessons from Nigeria. As per reports, Zimbabwe is seemingly not planning to back out from its crypto plans even with the country’s dimming interest shown towards crypto.
Innocent Matshe, Deputy Governor of the Southern African nation’s Reserve Bank revealed that Africa’s first CBDC, eNaira has seen quite a slow uptake with its launch, however, that has not affected Zimbabwe’s decision-making. In fact, the country is preparing to introduce a digital currency even as the jury is ‘still out’ on the plans, Matshe added.
In an interview at a conference held near Port Louis, Mauritius, Matshe emphasized the real hesitancy in the market towards crypto.
Matshe further added:
"WE DON’T THINK THAT IT IS A DETERRENT AT THIS POINT, WE JUST THINK THAT IT IS A LEARNING POINT FOR US. WE CAN THEN ADOPT MEASURES TO TRY AND MITIGATE THE FACTORS THAT ARE CAUSING THAT HESITANCY IN THE NIGERIAN MARKET."
