News Updates September 13, 2022

1. Bitcoin Slides as U.S. Inflation Exceeds Estimates at 8.3%

The latest Consumer Price Index print came in 20 basis points lower than last month’s 8.5% print, but surpassed expectations of a cool-off to 8.1%.

* U.S. inflation hit 8.3% in August, the latest Consumer Price Index print has revealed. The price of goods rose 0.1% on a month-on-month basis.

* The print exceeded expectations of a cool-off to 8.1%.

* Markets reacted in a panicked fashion, with both Bitcoin and Ethereum tumbling hard immediately after the data dropped.

Bitcoin and Ethereum were hit hard as the inflation data dropped. 

U.S. Inflation Print Surpasses Expectations

U.S. inflation has decreased for a second consecutive month. 

The Bureau of Labor Statistics published the latest Consumer Price Index report Tuesday, showing that the price of goods rose by 8.3% on a yearly basis in August. 

The 8.3% figure exceeded economists’ expectations of a cool-off to 8.1%. It marks a 20 basis point decline against July’s numbers. The CPI rose 0.1% on a month-on-month basis. According to the report, rising shelter, food, and medical care costs were the biggest contributors to the all items increase. Gasoline prices, meanwhile, saw a decline.

Markets reacted to the print in a typically panicked fashion. S&P500, Dow Jones, and Nasdaq futures all tumbled ahead of the U.S. market open. Bitcoin also suffered a sharp decline in response to the print, sliding by 3.3% to around $21,604 at press time. Ethereum was hit harder, declining 5.8% to around $1,643. The selloffs are likely a result of the print surpassing expectations of a 40 basis point decline.

Inflation has been a major concern for households in the United States and across the world this year as countries battle rising prices across the board. One of the major contributing factors has been an increase in energy prices, which is thanks partly to Russia’s invasion of Ukraine (as many countries have sanctioned Russia over the war, President Putin has leveraged the country’s rich energy supplies against the West, leaving Europe on the cusp of its biggest energy crisis in decades). 

As the price of goods has risen, central banks around the world have responded by hiking interest rates in a bid to curb inflation. In the U.S., the Federal Reserve indicated that it would be taking a hawkish stance in late 2021, which sent chills through crypto and global markets. The Fed has since hiked interest rates multiple times to the current levels of between 2.25% and 2.5%. The Fed has indicated several times that it’s targeting a 2% inflation rate and the central bank’s chair Jerome Powell warned of more “pain” ahead at his speech in Jackson Hole last month, which could mean further hikes are on the horizon. Powell is expected to announce another 75 basis point hike at next week’s FOMC meeting. 

Markets have paid close attention to both the Fed and the CPI numbers over recent months. Since the Fed has committed to its plan to hike rates, rising inflation numbers have sent jolts through markets. That’s because hiking rates makes the cost of borrowing money more expensive, which tends to hurt risk-on assets as investors flee to traditional currencies like the dollar. For instance, when June’s CPI print came in at a 40-year high of 9.1%, Bitcoin and Ethereum suffered sharp selloffs.

2. Abu Dhabi regulator introduces its ‘guiding principles’ for crypto

The FSRA is taking a pro-market stance but pledges to comply with international safety standards.

The Financial Services Regulatory Authority (FSRA), the financial regulator of Abu Dhabi Global Market free economic zone (ADGM), published its “Guiding Principles” on its approach to digital asset regulation and supervision. 

Friendly in tone to the crypto industry, the principles pledge to comply with international standards in Anti-Money Laundering (AML), combating the financing of terrorism (CFT) and supporting financial sanctions. 

Five principles were published without date specification on the official webpage of the ADGM. They go under the titles of Internationally Recognised Regulatory Framework, Dynamic and Market-Oriented Regulations, Risk-focused and Proportionate Approach, Cooperation and Shared Responsibility, Delivering High Standards of Quality & Service.

While in general the tone and content of the principles correspond to standard declarations of making the market more dynamic, innovative and safe, at the same time, there are some specific points that would define the ADGM regulatory landscape.

 *Swiss and Dubai crypto associations team up*

The regulator also intends to collaborate closely with market participants on a “regular but informal” basis. This will include one-on-one sessions between regulatory and business teams, as well as the working groups of market participants and professionals.

In March 2022, ADGM published a consultation paper proposing that licensed companies will be allowed to facilitate nonfungible token (NFT) trading in the jurisdiction. In April, Binance and Kraken became the first foreign companies to receive regulatory approvals to operate in ADGM.

3. Crypto Fraud and Asset Recovery Network in U.K. launches Hong Kong chapter

The Crypto Fraud and Asset Recovery Network (CFAAR), which calls itself the first global network of its kind, has launched a Hong Kong-based chapter in collaboration with seven local finance, law, and crypto regulation experts. 

* The Crypto Fraud and Asset Recovery network began in the U.K. in August 2021, under the international commercial law firm Reynolds Porter, in light of rising crypto-related fraud. 

* Chainalysis, an American blockchain analysis firm, has reported that the overall value of digital assets lost to crypto crime decreased this year but the value of cryptocurrency stolen in hacks is outpacing 2021 year-on-year, with US$1.9 billion stolen between January and July this year.

* “The increased uptake of digital assets and of related illicit activity is driving a sizeable uptick in disputes and court cases in Hong Kong,” wrote the group of founding members in a Tuesday press release. 

* The Hong Kong group will work closely with other branches to make digital asset adoption safer and more secure by acting as an independent voice in crypto-related judicial and regulatory matters within Hong Kong.

• CFAAR will promote legal and investigative tools to recover digital assets lost to fraud, improve counseling of fraud victims, and encourage best practices among the city’s digital asset service providers.

4. Breaking: South Korean Prosecutors Starts New Investigation Into Terra (LUNA)

South Korean prosecutors’ team has started a new investigation and review on Terra tokens to categorize them under securities. TerraForm Labs, its founder Do Kwon, and other affiliates will also be charged with violating the Capital Market Act if Terra tokens LUNA, LUNC, and UST (now USTC) are found to be securities.

The Seoul Southern District Prosecutors Office’s Financial and Securities Crime Joint Investigation Team met with experts from crypto exchanges and financial regulators including Financial Supervisory Service to determine if Terra tokens are securities, reported the Korea Herald on September 13.

The move will also accuse TerraForm Labs, Do Kwon, and other affiliates of violating the Capital Markets Act. Currently, Terra and its executives are under scrutiny for fraud and tax evasion allegations.

The prosecutors investigating the collapse of LUNA (now LUNC) and UST (now USTC), may charge the defendants with Capital Markets Act violations irrespective of the financial authorities’ judgment. Moreover, the prosecutors’ decision would also help lawmakers in the upcoming crypto regulation.

Financial regulators are working to categorize cryptocurrencies into securities and non-securities. However, some experts believe crypto are securities as they can be issued like stocks, while others consider crypto as a commodity due to their decentralized properties.

The U.S. Securities and Exchange Commission (SEC) is also investigating LUNA developer Terraform Labs. Terra’s decentralized finance platform Mirror Protocol is under investigation for selling mirrored assets of US stocks in UST.

While South Korean authorities investigate fraud and other allegations against Terra, LUNC and LUNA tokens jumped over 200% last week. Both tokens saw over $3.5 billion daily trading volume.

Terra Classic (LUNC) price made a high of $0.00058. Currently, it is trading at $0.00037, down nearly 2% in the last 24 hours. The rally comes amid support for the 1.2% tax burn and staking of LUNC tokens.

5. Ethiopian Central Bank Restricts Amount of Cash Travelers Can Hold, Sets Foreign Currency Conditions

According to the National Bank of Ethiopia’s directive, which became effective on September 5, persons entering and departing the country in possession of local currency are now subject to new restrictions. Individuals may not hold local currency whose value exceeds $57.00 or 3,000 birr. The directive also sets conditions and circumstances under which Ethiopian residents and non-residents may possess and use foreign currency.

 *Converting All Foreign Currency at Authorized Forex Bureaus*

The Ethiopian central bank recently issued a directive which sets a limit on the amount of the birr that “a person entering into and departing from Ethiopia” may have in their possession. In addition, the directive, which became effective on September 5, sets conditions and circumstances under which Ethiopian residents and non-residents may possess and use foreign currency.

In a statement, the National Bank of Ethiopia (NBE) outlines the exact value of both the birr and foreign currency that residents may hold.

“According to the directive, a person entering into and departing from Ethiopia may hold up to [a] maximum of [$57.00] or birr 3,000.00 (birr three thousand) per travel to and from Ethiopia. However, a person travelling to Djibouti may hold up to a maximum amount of [$190.00] birr 10,000 (birr ten thousand) per travel,” the NBE said.

For Ethiopians re-entering the territory of the landlocked African country, the central bank said they are required to “convert all foreign currency he/she is carrying at an authorized forex bureau for the equivalent sum in birr.” Alternatively, they can deposit the forex into a foreign currency account within 30 days of returning to the country, the central bank added. For residents holding $4,000 or more, the NBE directed that such individuals should make a customs declaration.

On the other hand, when a non-resident foreign national of Ethiopian origin or a non-resident Ethiopian who owns foreign currency gets into the country, the central bank’s directive requires them to “present custom declaration” if the value of foreign currency held exceeds $10,000.

However, for foreign currency-holding individuals that enter Ethiopia using land transport, the NBE requires them to make a declaration of such holdings if the value is more than or equivalent to $500.

6. Singapore central bank says data on crypto holdings by general public not available

The Monetary Authority of Singapore (MAS) said it is unable to determine the proportion of cryptocurrency holdings by the general public in the city-state as these include transactions with both Singapore-based as well as overseas service providers.  

* Data on the total cryptocurrency holdings of the Singapore public are not available,” Tharman Shanmugaratnam, minister in charge of MAS, said in a reply to a parliamentary question. 

* He said it is not possible to determine how much cryptocurrency holdings Singapore’s public has obtained through MAS-licensed DPT (Digital Payment Token) service providers as these transactions involve overseas service providers as well. 

* But he warned that the general public investing in cryptocurrencies “stand to lose all the monies they have put into cryptocurrencies” as prices fluctuate “wildly.”

* The central bank has consistently warned Singapore’s general public against trading in cryptocurrencies and even said that cryptocurrencies have no fundamental value. 

• MAS moved to discourage retail trading by restricting crypto advertising in public areas, while stressing it intends the island nation to be at the forefront of digital asset innovation.

7. Uruguay Introduces Cryptocurrency Law in Parliament

A new cryptocurrency bill project was introduced by the executive power to the Parliament of Uruguay. The bill seeks to clarify how crypto assets will be regulated in the country, giving the Central Bank of Uruguay competence over cryptocurrency assets, modifying its organic charter, and introducing the Superintendence of Financial Services as the organization to oversee virtual asset service providers.

The executive power in Uruguay has presented a bill project to the parliament of the country with the objective of clarifying how cryptocurrency asset-related activities will be regulated. This, if approved, will be the first bill to address the gray area in which cryptocurrency exchanges and virtual asset service providers operate in the country.

The proposed bill modifies the organic charter of the Central Bank of Uruguay and introduces the Superintendence of Financial Services, an organization part of the central bank, as the main overseer of the activities of virtual asset service providers. In this sense, the document establishes that custody providers, companies that facilitate the purchase and exchange of virtual assets, and third parties that lend financial services related to the offer or sale of a virtual asset will be considered part of this class.

However, the bill introduces another class of organization as “virtual asset issuer,” defining it as a platform that issues any type of virtual asset included within the regulatory perimeter or requests admission of regulated virtual assets on a virtual asset trading platform.

The text also makes reference to virtual asset securities, which are referred to as the digital counterparts of the already known financial securities.

There have been previous attempts at legalizing crypto as a payment method in the country. A cryptocurrency bill project presented by Senator Juan Sartori last year aimed to achieve this goal. Also, in August, the Central Bank of Uruguay issued a summons to Binance due to its offering of savings-oriented cryptocurrency-based financial products.

8. Bahrain central bank set to test Bitcoin payment processing solution

The Central Bank of Bahrain (CBB) plans to roll out a Bitcoin (BTC) payment processing and payout solution in partnership with BTC payment processor OpenNode. 

In a press statement published on September 13, OpenNode stated that the solution is guided by the growing interest in digital assets across the Middle East. The company noted that the solution would be central to pushing economic growth while supporting businesses. 

Once deployed, OpenNode said that the payment solution would usher in the room to develop similar products in the future. 

According to Dalal Buhejji from the Bahrain Economic Development Board, the Bitcoin payment solution is part of the growing digital economy in a regulated space. 

Indeed, Bahrain has recently focused on improving the environment for businesses in the crypto space after releasing the Regulatory Sandbox to develop the country’s FinTech ecosystem to diversify the digital economy.

Part of the framework allows crypto entities to conduct real-time research in a controlled environment but under the surveillance of a regulator. 

The development of the Bitcoin payment processor highlights Bahrain’s continued efforts to develop the cryptocurrency sector. In the recent past, the country has also enabled more businesses to set up bases in the region. 

For instance, in May 2022, the CBB granted a Category 4 license to cryptocurrency exchange Binance, allowing the platform to offer a wider range of services to users in the country. 

At the time, Binance was the first crypto service provider to hold a full Category 4 license in Bahrain.

9. You Can Now Earn Bitcoin By Surfing the Web on Chrome, Brave, and More

Slice’s browser extension has implemented Zebedee’s tech to pay users BTC for viewing ads.

* Adtech startup Slice has implemented Bitcoin’s Lightning Network into its web browser extension, letting users earn BTC rewards for viewing ads.

* It uses Zebedee’s Lightning Network integration, which has previously been used across various games.

Brave popularized the concept of giving users crypto rewards for using its web browser, and has seen surging user counts as a result. But now you can add similar functionality to an array of browsers—including Chrome and also Brave—and earn Bitcoin in the process.

Adtech startup Slice announced today that it has integrated Bitcoin payments into its browser extension, letting users earn cryptocurrency by viewing ads while surfing the web. Slice’s free extension works with Google Chrome, Microsoft Edge, Mozilla Firefox, and even Brave.

The newly-enhanced extension is based on technology from Bitcoin payments startup Zebedee, and utilizes Bitcoin’s Lightning Network for micropayments. As users browse the web, they’ll see additional advertisements inserted into pages. Viewing those ads earns users points called Slices, which can then be swapped for Bitcoin via a Zebedee account.

Today, people surfing the web are right to have high standards for receiving value in exchange for their attention, and to claim that value in the form of real money, delivered to them instantly," said Slice COO and co-founder Darina Oumanski in a release.

Brave users will be able to earn both Bitcoin rewards (via Slices) and Brave’s own Basic Attention Token (BAT) at the same time, a Zebedee representative confirmed to Decrypt, enabling a double dip of crypto rewards in exchange for seeing more ads while browsing.

Zebedee has previously focused its technology on games, and last year launched modified servers for the hit first-person shooter game "Counter-Strike: Global Offensive" (CS:GO) that let players wager and win small amounts of Bitcoin measured in satoshis, or “sats.” Each Bitcoin (BTC) is made up of 100 million satoshis.

The firm recently partnered with game developer Viker to expand the BTC-earning model into familiar games like Solitaire and Sudoku, plus a Wordle-like game called "Missing Letters," all of which reward players with free satoshis.