Bitcoin Effect: El Salvador’s Bond Drop as IMF Deal Seems Out of Reach, BTC Purchase Under Investigation

Bitcoin Effect: El Salvador’s Bond Drop as IMF Deal Seems Out of Reach, BTC Purchase Under Investigation

S&P Global says this adoption has immediate negative implications on its credit rating while protesters in the central American country vandalize an ATM and carried signs reading “we were defrauded by Bitcoin.”

S&P Global said this week that El Salvador adopting Bitcoin as legal tender has immediate negative implications on its credit rating.

According to S&P, the main risk of this adoption is that the central American country could have trouble securing a support program with the International Monetary Fund (IMF). Furthermore, it could threaten to increase the country’s fiscal vulnerabilities and hurt banks by creating currency mismatches when giving out loans.

“The risks associated with the adoption of bitcoin as legal tender in El Salvador seem to outweigh its potential benefits.”

“There are immediate negative implications for (the) credit.”

S&P is currently rating El Salvador at B- with a ‘stable’ outlook. Meanwhile, Moody’s cut the rating to Caa1, one step below B-, at the end of July while keeping it on a downgrade warning.

El Salvador bond spreads to US Treasuries went on to hit a record high this week, surpassing the previous height hit in May 2020, on the growing investor concerns that the country will not reach a $1 billion loan agreement with the IMF.

Amidst this, El Salvador’s Court of Accounts is investigating a complaint about the government’s bitcoin purchases and the deconstruction of kiosks for crypto ATMs. The legal analysis report for the same will be sent to the General Audit Coordination, reported Reuters.

The Court of Accounts, which oversees the country’s public resources, said it received a complaint late last week from a regional human rights and transparency organization about bitcoin implementation in El Salvador.

Cristosal, the organization, made the complaint against six members of the Board of Directors of the Bitcóin Trust. It has requested an audit of the authorization process for the Bitcoin purchase and to review the construction of the booths used for the ATMs.

As the Court of Accounts proceeds to carry out the investigation, Salvadorans have protested against President Nayib Bukele and accused him of a power grab. The protesters complained about the firing of the Supreme Court judges in May and the then-attorney general.

They also continue to complain about the law making bitcoin legal tender alongside the US dollar. Anti-government marchers carried signs that said “no to dictatorship” and “we were defrauded by Bitcoin.” The protesters vandalized an ATM that enabled the exchange of BTC for USD.

A recent poll by La Prensa Grafica newspaper showed that 85.7% of the 1,506 people polled across the country in the second half of August approved the president.

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Author: AnTy

Cohen Not Going to Miss “Incredibly Transformational” Crypto While Dalio Finds BTC as A Cash Alternative

Steven Cohen Isn’t Going to Miss “Incredibly Transformational” Crypto While Ray Dalio Finds Bitcoin as an Alternative to Cash

While Point72 founder’s “cryptomaniac” helped him understand crypto, Bridgewater Associates founder continues to reiterate that Bitcoin “could still be controlled” and that it “could be tulips in Holland.”

Ray Dalio, the founder of the world’s largest hedge fund Bridgewater Associates, reiterated that he owns some Bitcoin but expressed concern that there’s a danger of governments destroying the cryptocurrency market.

On CNBC during the SALT conference in New York, Dalio said,

“I think at the end of the day if it’s really successful … they will try to kill it. And I think they will kill it because they have ways of killing it.”

His comments came as US regulators are looking to increase oversight on the $2 trillion cryptocurrency market. Just this week, SEC Chair Gary Gensler said that the top securities regulator is working overtime and crafting rules to bolster regulation of crypto assets.

It, however, wasn’t the first time that Dalio raised concerns about political government action against Bitcoin. Previously he said that the government could ban the cryptocurrency as they would want to clamp down on alternative currencies that could challenge the dominance of the US dollar.

He further said that while El Salvador has become the world’s first nation to adopt Bitcoin as legal tender, India and China are “getting rid of it” while the US is talking about how to regulate it, so overall, “it could still be controlled,” Dalio said.

“It Could Be Tulips In Holland”

According to Dalio, cryptocurrencies represent diversification which “is a good thing,” noting portfolios need to be spread across more asset classes.

Dalio yet again called cash trash and warned that investors shouldn’t become too reliant on it. And he thinks Bitcoin is a good alternative to cash.

“I think it’s worth considering all the alternatives to cash and all the alternatives to the other financial assets. Bitcoin is a possibility. I have a certain amount of money in bitcoin.”

“It’s an amazing accomplishment to have brought it from where that programming occurred to where it is through the test of time.”

However, he also said that the leading cryptocurrency lacks intrinsic value or fundamental and objective worth. Then he likened it to the tulip bubble saying, in a historical perspective, there are many things that didn’t have any intrinsic value but had perceived value and went hot and cold.

“You just have to know what it is. It could be tulips in Holland.”

According to CNBC, Dalio owns a smaller percentage of bitcoin compared to gold holdings in his portfolio.

Not Going To Miss This

SALT conference host Anthony Scaramucci’s alternative investment firm, SkyBridge’s co-chief investment officer, Ray Nolte, meanwhile said at the event that they have a 12% investment in bitcoin.

Earlier this week at the conference, billionaire investor Steven Cohen also said that he hopes to not miss out on opportunities presented by digital currencies.

Cohen, the founder of Point72 Asset Management, shared that he was a bit of a skeptic when it came to cryptos until recently when his son, a “cryptomaniac,” helped change his mind.

“Once I decided there were opportunities, and I thought this could be a space like the internet — it could be incredibly transformational — I wasn’t going to miss this.”

Cohen, who has a net worth of $11.1 billion, is venturing deeper into the crypto world in both personal capacity and at his firm. He is also interested in the metaverse where “your mind can run wild.”

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Author: AnTy

Remittance and Fiat Devaluation Drives 1200% Growth in Africa’s Crypto Market: Report

Remittance and Fiat Devaluation Drives 1200% Growth in Africa’s Crypto Market: Chainalysis Report

Africa, the smallest crypto-economy, which received $105.6 billion worth of cryptocurrency between July 2020 and June 2021, saw a growth of more than 1200% by value received in the last year.

According to a report by Chainalysis, the region is seeing some of the highest grassroots adoption in the world, with Kenya, Nigeria, South Africa, and Tanzania all ranking in the top 20 of the Global Crypto Adoption Index.

This is due to P2P platforms being particularly popular in Africa. The reason for the popularity of P2P platforms in Africa is it is difficult to send money to crypto businesses from bank accounts.

“Crypto products are getting more user friendly, so they can onboard more people into the crypto economy and help them see that crypto is faster, cheaper, and more convenient,” said Artur Schaback, COO and co-founder of popular P2P exchange Paxful who is also seeing 300% growth in Kenya over the last year and 57% growth in Nigeria.

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Remittance is actually the primary reason African users are using these platforms, as some countries in the region have implemented strict capital controls.

This can be seen in the monthly growth of crypto payments below $1,000 in both volume and number of transfers.

Cross-region transfers also make up 96% of all transaction volume in Africa. Additionally, the share of retail-sized transfers at just over 7% of overall transaction volume is the biggest compared to the global average of 5.5%.

Many African users are also turning to cryptocurrency to preserve their savings amidst harsh economic conditions, says the report.

Paxful’s growth actually accelerated in Nigeria this past year during times of currency devaluation, noted Schaback. Chainalysis observed a similar phenomenon, showing when the value of Nigerian Naira or Kenyan Shilling value falls, the trade volume of respective fiat currencies increases.

And while African governments may follow other countries and introduce their own CBDCs, people may not be as receptive towards it given the instability and management issues with the fiat currencies.

“The only reason to use the e-naira over cryptocurrency would be trust in the government, and that trust has been eroded for many,” said Adedeji Owonibi, CEO and founder of a Nigerian blockchain consultancy, Convexity.

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Author: AnTy

BTC Miner Canaan Reports ‘Strongest Quarterly Sales’ Despite Unexpected Regulatory Policy & Volatility

Bitcoin Miner Canaan Reports ‘Strongest Quarterly Sales’ Despite Unexpected Regulatory Policy and Price Volatility

Bitcoin miner Canaan disclosed a record second-quarter 2021 results that showed that its total net revenue was $167.5 million. This is an increase of 507% from $2.45 million in the same period of 2020 and 168% from $62.6 million in the first quarter of this year.

This marks “the strongest quarterly sales in the Company’s operating history,” it noted.

Net income in Q2 was $37.9 million, again marking the highest quarterly net profit since the Company’s initial public offering (IPO) in 2019, compared to a net loss of nearly $191 million in Q2 of 2020 and a net income of 13.7 million in the first quarter of 2021.

“Despite unexpected regulatory policy dynamics and Bitcoin price volatility, we achieved record-high topline results,” said Nangeng Zhang, Chairman, and CEO of Canaan.

Going forward, for the third quarter of this year, the company is currently expecting total revenue to have a sequential increase of 10% to 30%.

The company also sold 5.9 million Thash/s in computing power, up 200% from 2.0 million Thash/s in the first quarter of 2021 and up 126.9% from 2.6 million Thash/s in the same period of 2020.

This increase was primarily due to an increase in the number of Bitcoin mining machines delivered, “driven by strong market demand,” the company said.

Canaan holds $189 million in cash and cash equivalents, as of June 30, an increase from roughly $60.8 million as of Dec. 31, 2020.

This surge was mainly due to a larger number of down payments the company received as a result of the larger volume of sales orders of Bitcoin mining machines and the net proceeds from its registered direct offering in May 2021.

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Author: AnTy

Chivo Implements Measures “Against Money Laundering,” El Salvador’s Largest Bank Accepts Bitcoin Payments

Chivo Implements Measures “Against Money Laundering,” El Salvador’s Largest Bank Accepts Bitcoin Payments

There is also “no tax” – income or capital – on profits from Bitcoin investment in the country in order to “encourage foreign investment,”

Bancoagrícola, the largest bank in El Salvador, will be allowing its customers to pay their credit card bills and loans in Bitcoin. The cryptocurrency can also be used to purchase goods and services from the bank’s merchant network.

Founded in 1955, Bancoagrícola is partnering with New York-based payment network Flex to enable the payments in BTC via its mobile app.

Flexa announced that the bank’s customers will be able to pay US dollar-denominated loans and credit card balances with BTC at “the exact fair market rate, without any additional fee or spread.”

Bancoagrícola merchants that are accepting payments through the bank’s Wompi payment gateway can also make use of Flexa-powered bitcoin payments.

Earlier last week, El Salvador became the world’s first nation to adopt Bitcoin as legal tender alongside the US dollar. The adoption also saw multinational chains like McDonald’s and Starbucks accepting BTC as a form of payment.

Adopting Bitcoin also means the nation won’t be levying any tax on cryptocurrency investment.

“If a person has assets in bitcoin and makes high profits, there will be no tax. This (is done) obviously to encourage foreign investment,” Javier Argueta, legal adviser to President Nayib Bukele, told AFP.

“There will be no taxes to pay on either the capital increase or the income.”

As for the fears over the potential for Bitcoin’s illegal use, Argueta said the wallet called “Chivo” allows Salvadorans at home and abroad to buy and spend the cryptocurrency as implemented “relevant mechanisms” to ensure traceability.

“We are implementing a series of recommendations from international institutions against money laundering,” said the adviser adding, transactions would be halted temporarily if the value were to collapse to minimize the impact of extreme currency fluctuation.

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Author: AnTy

Brevan Howard Ventures Deeper into Crypto; New Hires and Launching A New Division Called BH Digital

Brevan Howard Ventures Deeper into Crypto by Making a New Hire and Launching a New Division called BH Digital

The high-profile hedge fund is planning to increase its private and venture investments in crypto and further “significantly expand” its exposure to crypto-assets.

Hedge fund Brevan Howard has hired Colleen Sullivan, the chief executive of the digital arm of trading firm CME Digital, to lead its private and venture investments in the cryptocurrency market.

Sullivan will also chair the investment committee for a new strategy focused on crypto, according to the company’s statement. Brevan CEO Aron Landy said,

“Colleen’s exceptional track record in making highly successful crypto venture investments will be of tremendous benefit to Brevan Howard clients and underscores the firm’s commitment to rapidly expanding its platform and offerings in cryptocurrencies and digital assets.”

Brevan Howard Asset Management recorded 2020 as its best year since the hedge fund first began investing about two decades ago, and it looks like it is planning to deploy these funds into the crypto market.

The fund is launching a new business division, BH Digital, to manage and “significantly expand” its exposure to crypto-assets.

Famous for its bets on macroeconomic trends, Brevan is the latest high-profile hedge fund that is moving deeper into crypto trading.

According to an annual report by PriceWaterHouseCoopers, total assets under management of crypto hedge funds globally have about doubled to $3.8 billion in 2020 from $2 billion in the previous year.

“What was initially seen as something of a fad now appears to be becoming a more permanent structure of the financial landscape… and very much forcing the institutional interest we are now seeing,” said Stuart Cole, a head macroeconomist at London-based Equiti Capital.

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Author: AnTy

Bitcoin and Other Cryptocurrencies Coming As An Alternative Payment Option for iOS Apps?

Bitcoin and Other Cryptocurrencies Coming As An Alternative Payment Option for iOS Apps?

A year-long battle between Epic Games and Apple regarding in-app payments came to a conclusion as the court ordered the tech giant is “permanently restrained” from prohibiting developers from external purchasing mechanisms.

A permanent injunction has been issued against the tech giant Apple which means developers are now allowed to direct their customers to other payment systems.

The order was issued towards the end of last week by Judge Yvonne Gonzalez Rogers in the Epic v. Apple case, putting new restrictions on Apple’s App Store rules.

Last year in August, the maker of Fortnite filed a lawsuit against Apple after the company removed the popular video game from their app stores because Epic violated the App store guidelines regarding in-app payments.

Epic Games wanted to use alternative payment processing tools, which included “Bitcoin or other cryptocurrencies,” to spur innovation and offer lower prices and better service to their users.

After a year-long legal battle, finally, it concluded on Friday as The Verge reported that iOS apps must be allowed to direct users to other payment options which go beyond what Apple offers.

Under the new order, Apple is “permanently restrained and enjoined from prohibiting developers from including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing and communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.”

The injunction is scheduled to take effect on December 9th, that is, in 90 days unless prohibited by a higher court.

However, in a separate judgment, the country also affirmed that Epic Games was in breach of its contract with Apple when it implemented the alternative payment system. As a result, it has to pay 30% of its revenue, which comes to over $3.5 million, generated since this implementation, to Apple.

This is due to the fact that “The relevant market here is digital mobile gaming transactions, not gaming generally and not Apple’s own internal operating systems related to the App Store,” explained Judge Gonzalez Rogers.

As such, while it couldn’t be concluded that Apple is a monopolist, it was indeed found that Apple engaged in anti-competitive conduct.

Epic Games CEO and founder Tim Sweeney, who praised blockchain-based underpinnings for an open Metaverse earlier this year, said on Twitter that this “ruling isn’t a win for developers or for consumers. Epic is fighting for fair competition among in-app payment methods and app stores for a billion consumers.”

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Author: AnTy

Bitcoin Drops to $43,500 as MicroStrategy Buys Another 5,050 BTC at Average Price of Over $48k

Bitcoin Drops to $43,500 as MicroStrategy Buys Another 5,050 BTC at Average Price of Over $48k

Business intelligence company MicroStrategy has purchased an additional 5,050 Bitcoin worth nearly $243 million in cash.

MicroStrategy now holds a total of 114,042 Bitcoin, acquired for $3.16 billion at an average price of $27,713 BTC.

This latest purchase was made at an average price of $48,099 per BTC.

As of writing, BTC/USD is trading around $43,500 in a volatile start to the week. September started on a positive note as it moved up from about $47k to nearly $53k last Tuesday, the day El Salvador officially adopted Bitcoin as legal tender alongside the US dollar.

But the very same day, BTC/USD fell to about $42,850. And since then, the market has been oscillating between $43k and $47k. As of writing, BTC is trading around $44,000.

In line with this, Ethereum (ETH) slid down to nearly $3,100 before making its way to $3,200 and the total crypto market cap is around $2 trillion. ETH -3.35% Ethereum / USD ETHUSD $ 3,287.54
-$110.13-3.35%
Volume 22.7 b Change -$110.13 Open $3,287.54 Circulating 117.51 m Market Cap 386.33 b
4 h More than 65% of South Korean Crypto Exchanges to Shut Down Once FSC Deadline Hits 6 h Assets in Crypto ETFs Triple in Just Six Months, Cathie Wood’s Ark to Start Investing in Canadian Bitcoin ETFs 9 h Bitcoin Drops to $43,500 as MicroStrategy Buys Another 5,050 BTC at Average Price of Over $48k

It is possible the losses recorded by the crypto market were due to a fake announcement regarding that retail giant Walmart accepting the cryptocurrency Litecoin (LTC) for payments from shoppers. A Walmart spokesperson has confirmed that the press release is not authentic.

LTC/USD jumped 35% on the news to as high as $238 only to tumble down to $180. LTC -2.05% Litecoin / USD LTCUSD $ 179.37
-$3.68-2.05%
Volume 8.71 b Change -$3.68 Open $179.37 Circulating 66.75 m Market Cap 11.97 b
9 h Bitcoin Drops to $43,500 as MicroStrategy Buys Another 5,050 BTC at Average Price of Over $48k 4 d Robinhood Trading App Rolls Out “Dollar Cost Averaging” for Crypto Investments 1 w SBI Holdings to Launch Japan’s First Crypto Fund Before 2021 is Over

MSTR share prices dropped in tandem to about $600, on a decline since early August and down 54% from the all-time high of $1,315 hit in early February.

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Author: AnTy

Crypto Market Update: Sentiments Remain in “Fear” as Traders Go Short After ‘Buy the Dip’ Opportunity

Crypto Market Update: Sentiments Remain in “Fear” as Traders Go Short After the ‘Buy the Dip’ Opportunity

The crypto market hasn’t recovered from Tuesday’s flash crash yet, with Bitcoin still trading under $46,000 and Ether below $3,400. The total cryptocurrency market cap is also currently below $2.2 trillion.

This drop-in crypto prices, so soon after the May crash from which the market only started to recover on July 21st, has the market sentiments turning back to “fear.”

The Crypt Fear and Greed Index is currently giving a reading of 31, down from 79 in late August but up from a reading of 10 in late June.

“Markets are kind and offer opportunity to new Investors through such corrections,” said Siddharth Menon, COO of Binance acquired Indian crypto exchange Wazir X. “Investors psychology is to buy the dip but very less percentage of investors actually buy the dip. Most of us wait for the bottom to buy and top to sell. In reality that is an impossible task. Staying Invested in markets has always been more rewarding than timing the market.”

Interestingly, despite the pullback and the healthy reset in the funding rate, which are currently the highest at 0.0209% on OKEx for Bitcoin perpetuals and on some exchanges, it has gone even negative, shorts are leading the futures market.

The majority of the Bitcoin trades at 50.7% are currently short, much like for Ethereum on which traders are short 51.19%, according to Bybt.

While the market slowly moves upwards, the sell-off this week came at a time when Bitcoin made history by becoming the legal tender alongside the US dollar. While this big move initiated a sell-off in the market, it is expected to kickstart a momentum that will continue to other countries.

“In the coming years, many more nation-states will use crypto as part of their monetary policy, either as reserves in their central banks or using cryptocurrency rails for central bank settlements, or potentially just simply taking a cryptocurrency as El Salvador has done and make it the national currency,” said Cardano founder Charles Hoskinson in a YouTube video earlier this week.

According to him, the younger generation, those under the age of 25, the majority of whom have a positive view on cryptos and also own them, will trigger the mass adoption. “That’s the future,” he added.

Meanwhile, US regulators are amping up their efforts to regulate the sector as we saw Coinbase talking about receiving a Wells Notice from the SEC. It just might be the negative effect of SEC’s crypto policy that Ark has amended its prospectus of a Bitcoin ETF to include that the fund will invest in crypto ETFs in Canada.

Eric Balchunas, a Senior ETF Analyst for Bloomberg, estimates “they looking to swap out GBTC, which they own $350m worth for one of the Canadian ETFs, which tracks better.”

“SEC policy is causing capital flight from the US to Canada,” commented Jake Chervinksy, general counsel at Compound Finance, on ARK’s move.

Still, price-wise, FOMO is well and alive in the crypto market as mid and small-cap cryptos like ALGO, FTM, and NEAR, continue to rally, and the macro environment is also in favor with tapering not begun yet.

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Author: AnTy

Bank of Mexico Governor says Bitcoin Is More like Precious Metal than Legal Tender

Meanwhile, to billionaire investor Leon Cooperman, Bitcoin doesn’t make “a great deal of sense” because he’s old, not to mention he’s a “paper guy.”

Riksbank Governor Stefan Ingves compared buying and selling bitcoin to trading stamps and questioned its staying power without the government’s backing.

“Private money usually collapses sooner or later,” said the governor of Sweden’s central bank at a banking conference in Stockholm.

“And sure, you can get rich by trading in bitcoin, but it’s comparable to trading in stamps.”

Ingves said earlier this year that cryptos are unlikely to escape regulatory oversight as they rise in popularity.

Much like Ingves, billionaire investor Leon Cooperman is skeptical of the leading cryptocurrency, which doesn’t make “a great deal of sense.”

“I say that if you don’t understand bitcoin, it means you’re old. I’m 78. I’m old. I don’t understand it,” he said on CNBC.

Gold is a “better” store of value than Bitcoin if one is nervous about the world, as per Cooperman. But he doesn’t own much bullion either as he’s a “paper guy” and “a perennial optimist.”

According to the hedge fund manager, it isn’t in the US government’s interest to make way for a substitute to the dollar either, “My guess is I’d be very careful in bitcoin,” he said.

Evolved Fiat Money

But unlike Ingves and Cooperman, the chief of Bank of Mexico believes, Bitcoin is more than just money; in fact, it is a means of barter that is an “evolved” version of fiat money.

On Thursday, Governor Alejandro Diaz de Leon called Bitcoin a high-risk investment and a poor store of value.

According to him, receiving Bitcoin in exchange for a good or service is more like bartering because there isn’t really the exchange of money for a good, but the person is actually exchanging a good for a good.

“In our times, money has evolved to be fiat money issued by central banks.”

“Bitcoin is more like a dimension of precious metals than daily legal tender.”

According to the head of the apex bank, for a cryptocurrency to be considered money, it must be a reliable payment method and safeguard its value, pointing to its high volatility where it fluctuates 10% from one day to another.

“You don’t want that volatility for purchasing power. In that sense, it is not a good safeguard of value.”

Saving Millions of Dollars

The Banxico boss’s comments on Bitcoin came the same week that another LATAM country, El Salvador, officially adopted Bitcoin as a legal tender alongside the US dollar. Another country, Panama, is moving to embrace digital currencies as well.

As we reported, EL Salvador, whose 70% population doesn’t have a bank account, became the world’s first nation to adopt Bitcoin to increase financial inclusion and cut down on the high cost and inefficiencies involved in remittances.

Last year, El Salvadorians living abroad transferred nearly $6 billion home, about 25% of the country’s GDP. But a chunk of this goes to the middleman facilitating these international transfers.

El Salvador President Nayib Bukele estimates that MoneyGram and Western Union will lose $400 million a year in commission for remittances should bitcoin adoption scales.

According to Mario Gomez Lozada, who worked as a banker with Merrill Lynch and Credit Suisse and now runs a crypto derivatives exchange, this figure will be closer to $1 billion.

Remittances are a major support for Mexico’s economy, which rose to their highest-ever level in February 2021 since records began in 1995. Remittances to Latin America’s second-largest economy in February recorded $3.174 billion and totaled $40.61 billion last year, according to central bank data.

This means Mexico can gain immensely if it decides to adopt Bitcoin and cryptocurrencies like other countries in the region.

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Author: AnTy