FUD of the Week: China and US Treasury Unsuccessful in Attacking Bitcoin

This week as we reported, China Police seized more than $4.2 billion worth of the crypto asset from the PulsToken Ponzi scheme.

However, it was the officials informing the public, as the crypto market has known all along, about how and where these funds have been moving thanks to the transparency of the blockchain technology.

Researcher Ergo has been updating the community about the sale of these tokens over the years, which peaked in mid-2019. Only about 15k of the BTC are left of the original 201k BTC now.

What is really interesting about China’s latest summary is that the authorities might be the ones involved in the sale of crypto assets all this time.

“Chen Bo, the mastermind of PlusToken (arrested in June 2019), was entrusted with selling PlusToken’s BTC, via a third party business, on behalf of the CCP?” commented ErgoBTC adding, “In return, he only gets 8 years in the gulag for architecting a multi-billion $ Ponzi? What kind of communism is this?”

The good news about this all is the market won’t be getting smashed as most of the Bitcoin has already been dumped into the open market through OKEx and Huobi. It was this sale-off at that time in mid-2019 that sent BTC crashing from $14k to $6k in six months.

There isn’t really anything left to send to China’s national treasury as they already sold most of it all. However, the same can’t be said of ETH and other altcoins, including LTC, EOS, DASH, XRP, DOGE, BCH, and USDT.

“Most importantly, this can be seen as the first government attack toward Bitcoin via liquidity games and price manipulation. IT FAILED,” said market analyst David Puell.

The price of cryptocurrencies had already taken a big drop before this news hit the market, sending BTC to nearly $16,300. Today, the crypto market is actually green.

Besides, over-leverage and BTC already rallying 85% in less than two months being the reason for the crash, Coinbase CEO Brian Armstrong spreading the U.S. Treasury FUD is another one.

While “false, it should be taken seriously,” said Puell.

Regulating self-custodied wallets is already forced upon exchanges in countries like Switzerland, Singapore, and the Netherlands.

While the crypto community continues to oppose these regulations, more rules and laws are expected, which means “privacy and ownership, even more so than price, will be the most contested subjects in Bitcoin in the next few years.”

The implication of this in the US on the price of Bitcoin in the long term, however, isn’t expected to change anything.

“The fundamentals remain the same, so in my view, even if we continue correcting ($14k, 12k, or whatever), the cause would be simply out of major market actors taking profits with the aim to buy cheaper,” Puell said.

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Author: AnTy

China’s Digital Currency to Roll-Out In A Second City After Successful Trials In Shenzhen

  • The second city in China is launching a lottery to test its digital currency/electronic payment (DC/EP) project, a local report states.

On Monday, local Chinese media The Paper reported that the district of Suzhou in Xiangcheng would launch a lottery to give away the country’s central bank digital currency (CBDC) in a bid to test the real-use cases of the digital currency. The ‘red envelop’ lottery is set to launch on December 12th across the city, a date known as Double 12 across China, and an end-year shopping festival.

The report said the lottery would be released similar to the one carried out in the city of Shenzhen in mid-October. In Shenzhen, the endeavor was a highly successful one, with over 50,000 participants winning 200 digital yuan each – totaling approximately $1.5 million. A later report confirms that over 95% of the digital yuan distributed were used in two weeks, stretching to over 3000 stores that accept the digital currency.

The city was chosen given the large prevalence of installed near-field communication (NFC) and QR code point-of-sales across merchant stores. Suzhou’s DC/EP trial is also set to introduce several new features not used in Shenzhen’s trial phase, such as the offline payment feature and the smartphone touch functions.

China’s DC/EP project will also launch a trial in Chengdu, which is preparing in anticipation by installing the NFC and QR codes point-of-sales. The People’s Bank of China (PBoC) also announced plans to launch the DC/EP project in the Winter Olympics venue in 2022.

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Author: Lujan Odera

Japan Joins the CBDC Race With A ‘Digital Yen’ Trial; 30 Major Firms Will Start Experiments In 2021

While China has already successfully run the pilot test of its digital yuan, now Japan is getting ready to do the same.

In its attempt to catch up, Japan’s 30 major firms will begin experiments of issuing a private digital currency next year, said the group’s organizing body on Thursday, reported Reuters.

The group consists of the three largest banks in the country, along with retailers, utilities, brokerages, and telecommunication firms. Using a common settlement platform, the group will conduct the experiments for issuing a digital currency. Hiromi Yamaoka, a former BOJ executive in an online briefing, said,

“Japan has many digital platforms, none of which are big enough to beat cash payments.”

“We don’t want to create another silo-type platform. What we want to do is to create a framework that can make various platforms mutually compatible.”

Recently, the Bank of Japan announced its plan to experiment with issuing a digital yen in a country where cashless payments make up only 20% of total settlement than China’s 70% and the United States’ 45%.

Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group — the megabanks of Japan have already rolled out their own digital payment systems.

Yamaoka said while private banks will be in charge of issuing the digital currency in the experiments, other entities’ prospects also issuing a digital yen won’t be ruled out.

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Author: AnTy

China’s Crackdown on Crypto Rears its Head as BTC Gets “Over-Extended” & PBoC Focuses on DCEP

As China accelerates its digital yuan development, it is taking steps to tighten its control on the cryptocurrency market.

In 2017, during the bull market, the reports came of China banning virtual currencies on domestic cryptocurrency exchanges but permit over-the-counter transactions.

Now, as BTC enjoys a bullish market structure, currently around $13,750, China is further taking more steps towards regulating the market.

Last month, one of the biggest cryptocurrency exchanges of the country, OKEx’s founder, was arrested, which resulted in the platform suspending any withdrawals which are yet to resume.

The platform, however, maintains that the founder has been assisting in a separate investigation.

According to the latest local reports, another exchange, the biggest one this time, Huobi is facing a similar issue; its COO Zhu Jiawei being under police investigation. They have reportedly been planning in advance after the OKEx incident and are not expected to halt withdrawals.

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The exchange Huobi Global took to Twitter to deny the “rumors” of the arrest of a senior executive by local officials and that they are, in fact, “Operating Normally.”

Amidst this, as we reported, the Securities and Futures Commission (SFC) of Hong Kong is planning to propose a new licensing regime under which retail investors are banned from trading virtual currencies.

Additionally, all the crypto platforms operating in the city and overseas ones targeting local investors, are required to obtain a license to protect investors and combat money laundering.

There are also reports that buying and selling crypto may violate foreign exchange control and anti-money laundering laws. Those making profits from their crypto investments failing to pay income tax could also be suspected of tax evasions.

“The timing of the Chinese OTC and exchange crackdowns is no coincidence. The PRC government is sending a strong message about its stance on cryptocurrencies other than the DCEP,” said an executive at the crypto fund The Spartan Group.

However, China’s stance on crypto isn’t anything new, “It just rears its head every now and then,” he said, adding: “BTC was getting over-extended from a short term technical standpoint anyway so this event likely triggers some profit-taking.”

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Author: AnTy

China Planning to Legalize Digital Yuan; Forbids Yuan-backed Digital Tokens

China continues to lead in developing its central bank digital currency (CBDC) as it now considers giving it a legal foundation in an upcoming law revision, reported South China Morning Post.

In the past few weeks, the trial of the digital yuan in the real world took place through the giveaway of 50,000 digital “red packets”— a series of trials have been conducted in Suzhou, Shenzhen, Chengdu, and Xiongan — and now the central bank is also addressing all the problems that emerged in the pilot tests.

According to the media report, The People’s Bank of China (PBoC) published a draft law on Friday that would give the Digital Currency Electronic Payment (DCEP) system a legal status.

For the first time, it included the digital yuan, which was also defined as part of its sovereign fiat currency.

As per the draft law, issuing yuan-backed digital tokens by any party or any plans to replace the renminbi in the market would be forbidden.

DCEP, meanwhile, will be allowed to be circulated and converted like coins and physical banknotes.

“Its centralised management will be good to fight against cryptocurrencies and global stablecoins and prevent their erosion of currency-issuance rights,” Mu Changchun, head of the central bank’s digital currency research institute, said on Sunday at the Bund Summit in Shanghai.

The central government has already made clear that DECP won’t replace cash, but there are some domestic concerns related to its convertibility, privacy, and safety. Mu touched on these potential pitfalls as he said,

“The PBOC will also face anti-counterfeit issues in the digital era, and we must lower the cost.”

He further added that the central bank would be asked: “to coordinate the construction of digital currency application scenarios for the purpose of identification.”

A digital yuan product suitable for those senior citizens that don’t use smart terminals is also in development.

As for the threat the government-led project poses to private mobile tools like WeChat Pay and Alipay, Mu said they are just electronic wallets while the DCEP is the money inside them as such “not competitors.”

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Author: AnTy

$1.3M in Chinese Digital Yuan Were Spent In The Largest DCEP Test Run in Shenzhen Province

China is on the verge of completing trials and pilot programs for its national digital currency for the Yuan, which they are calling DCEP. The CBDC, which has been under development for over half a decade, is currently being put to the test through various government subsidies and as a form of payment in selected provinces in the country.

During the ongoing pilot run, the Shenzhen province has emerged as the largest spender of the digital yuan. As per a published report in South China Morning Post, over 47,000 consumers in Luohu district of Shenzhen province spent a total of 8.8 million yuan (equivalent to $1.3 million) during the week-long trial run for the digital asset.

As per the report, for one of the largest trial runs conducted by the People’s Bank of China, a total of near 2 million people applied for 50,000 digital ‘red packets.’ Each red packet contained 200 yuan equivalent to USD 30.

The airdropped digital yuan worth $1.3 million was spent in 62,788 transactions at 3,389 designated shops. A female user who was among the selected 47,553 consumers took to social media to share her experience and wrote,

“I received a text message every day urging me to spend the red packet before the trial deadline, so I spent the entire 200 yuan in a department store last Friday,”

Users Find the Use of Digital Yuan Quite Easy

Many users who received the airdropped red packets said that spending the national digital currency is quite easy and not much different than WeChat Pay and Alipay.

A state-backed newspaper also reported that around 110 petrol stations would also begin processing payments in digital currency later this month. The newspaper also noted that the processing of the payment for digital yuan is quite similar to the existing payment modes. The only difference between the current payment modes and the national digital yuan is that it won’t charge any additional processing fee.

Before the Shenzhen trial, a total of 3.13 million transactions have been made in the digital yuan, revealed Fan Yifei, a deputy governor at the People’s Bank of China.

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Author: Rebecca Asseh

Blockchain Technology to Grow the Global GDP by $1.76T In the Next Decade: PwC Report

  • China set to benefit the most from blockchain technology growth in the next decade with a protracted $440 billion boost in its GDP during this period.
  • This represents 25% of the total protracted global GDP boost from the innovative technology – set at $1.76 trillion by 2030.

A research report from a ‘big 4′ accounting firm, PricewaterhouseCoopers (PwC), “Time for Trust,” explores blockchain technology’s global socio-economic impact in the next decade. Targeting 2025 as the tipping point for the technology. If adopted at scale, PwC experts and researchers see a $1.76 trillion impact from the technology by 2030. This represents 1.4% of the total gross domestic product (GDP) of the world.

The report focuses on blockchain’s practical use in five key areas – provenance, payments and financial instruments, identity, contracts, dispute resolution, customer engagement – and how they deliver value in building transparent and efficient solutions across all industries.

According to the report, Asia is set to witness blockchain technology’s greatest impact, China leading the growth with a $440.4 billion projection. Japan and India expected to witness a $72.3 billion and $62.2 billion increase, respectively.

The United States is expected to witness a $407.2 billion increase in GDP from blockchain innovation growth in the next decade.

PwC report further states blockchain’s role in enhancing transparency and traceability as the sector with the most growth potential – projected to grow by $$961.6 billion by 2030. Anthony Bruce, Partner, and Pharmaceutical and Life Sciences Leader, PwC U.K, praised the potential of blockchain innovation in providence and traceability in the healthcare industry, stating,

“For healthcare organizations, blockchain can ensure patient safety is at the heart of the pharmaceutical supply chain. It has the potential to give patients confidence in the authenticity and origin of drugs.”

Payments and securitization of wallets are also picking up the pace and is expected to grow by $433.2 billion in the next decade. The U.S is expected to lead global growth in this period and is expected to experience a $136.3 billion GDP growth from blockchain-based payment systems, with China coming in a close second at $104.6 billion.

“Blockchain has the potential to cut costs, speed up transactions and promote greater financial inclusion by streamlining cross-border and remittance payments,” Lucy Gazmararian, Crypto, and FinTech Advisory, PwC Hong Kong said.

“These powerful innovations will transform the payments infrastructure.”

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Author: Lujan Odera

People’s Bank of China (PBoC) Testing Digital Yuan (DCEP) for Credit Card Payments

China has been aggressively developing its central bank-issued digital currency (CBDC), popularly known as digital yuan. As per the latest reports, the People’s Bank of China is currently running a pilot project to test the use cases of its digital yuan for card payments, fees, credit card payments, and more.

China has been at the forefront of developing a national digital currency called DCEP. The government authorized the research for the project more than five years ago, and many people were speculating for an official launch by September last year. However, digital yuan was eventually made public at the start of 2020, and the PBOC jas been testing various use case for the digital currency ever since.

The first pilot program for DCEP saw it being used as a travel subsidy for government employees in 4 cities. Later the pilot program was expanded to several universal fast food and beverage companies operating in China, which included Starbucks and McDonald’s as well.

Chinese Central Bank Tests Final Use Case for DCEP

As per a report published in the local daily 8BTC, the PBOC is currently testing digital yuans use a case in the credit card ecosystem as it could be a key to bringing in more customers. The trials in the credit card domain are also being seen as the final trial before the much anticipated public launch.

The central bank also revealed three new pilot-free trade zones (FTZ), in addition to the one already functioning in the Zhejiang province. These free trade zones are key to China’s dream of becoming a blockchain hub for enterprises.

The central bank of China also announced three large innovation trial projects, namely the National Small and Micro Enterprise Digital Credit Reporting Pilot, Digital Currency, and Financial Technology Innovation supervision.

While most of the countries have shown interest in researching and developing their own national digital currency (besides Australia), China managed to complete the research and development of its national yuan quietly and is slated to become the first country to launch its own digital currency. It is also important to note that while the national yuan project is being propagated as one of the true CBDCs, but many have warned that digital yuan would not work on a decentralized blockchain. Rather it is a sophisticated way for the government to control the flow of money outside the country.

Whether the project turns out to be what many are speculating, it would be interesting to see how digital currency is rolled out for the world’s most populated country.

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Author: Rebecca Asseh

Leading Iranian Power Stations to Supply Clean Energy to Crypto Miners

Iran has gradually become one of the leading crypto-mining hotspots in the world after China. The country turned to crypto amid growing concerns over its economy due to inflation and sanctions from the United States. The government regulated crypto mining a couple of years back, and since then, the crypto mining industry has flourished to become one of the key industries.

A few months back, the government authorized power plants in the country to mine bitcoin. It seems many power companies in the country are now willing to sell the electricity to the growing population of crypto miners in the country.

As per the latest report published in a local daily dated September 21st, Iran’s Thermal Power Plant Holding Company (TPPH) plans to sell their surplus electrical supply to crypto miners. TPPH is one of the largest power companies in Iran, and the reports suggest that the company is already in talks to hold a tender for supplying surplus electrical energy from three of its powerplants to crypto mining farms in the country.

The Iranian government’s expenditure on building an infrastructure for energy production has borne fruits, and the county has seen great progress in producing electricity. However, the government has also restricted power companies to stable price regimes, limiting these power companies from making great profits. Thus, supplying the surplus energy to crypto miners can prove a big revenue booster for these firms.

Energy Companies to Supply Only Clean Energy

The government has allowed for the distribution of surplus energy to crypto miners; however, this surplus energy needs to be clean and green. As a result, the power companies can only sell electricity produced from clean natural sources like wind and solar rather than ones generated by burning fossil fuels.

At present majority of crypto mining is done via fossil-fuel based electric power, which is available to the miners at subsidized rates. However, the move from TPPH could prove to be a big game changer and could pave the way for the use of clean and green energy for crypto mining.

In fact, Iran has single-handedly brought down the percentage of clean energy used for crypto mining due to the cheap price of fossil-fuel generated electricity. The country has also seen a significant rise in the mining operations ever since the government decided to regulate the mining industry rather than putting a blanket ban. There have been several rumors from time to time that the Iranian government is looking to launch its own central bank-backed digital currency, but nothing concrete has come out of it yet.

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Author: James W

China Should Seize the ‘First Mover’ Advantages of Launching A CBDC: PBoC

China should aim at becoming the first country to issue digital currency as part of its efforts to internationalize the yuan and lessen its over-dependence on the world’s dollar-dominated payment system, the People’s Bank of China (Chinese central bank) said.

The commentary appearing in China Finance, a People’s Bank of China run magazine, opined that the rights and capacity to offer and control digital currencies is set to become the ‘new battlefield’ among various sovereign nations. The article also claims that issuance and the circulation of virtual currency will alter the current international financial system.

The article argues that China should aim at becoming a first mover in the digital currencies space and calls for the acceleration of the development of the country’s CBDC.

“China has many advantages and opportunities in issuing fiat digital currencies, so it should accelerate the pace to seize the first track,” says the article.

Also, the article argues that data feedback from a Chinese central bank-issued digital currency (CBDC) would be vital for the development of a national monetary policy, which is imperative for economic recovery in the post-pandemic landscape.

The article also revealed that PBoC’s digital currency research outfit had filed approximately 130 patents related to crypto applications touching on issuance, circulation, and implementation.

The People’s Bank of China’s research institute was founded in 2015 to look at the feasibility and implementation process of digital currencies, to reduce the costs of circulating fiat currency and enhance policymakers’ grip in the money supply ecosystem.

Last month, various state-run Chinese commercial banks embarked on large-scale piloting of the digital wallet, which is a step closer to the highly awaited official launch of the digital currency. PBoC revealed last month that about 400 million people are involved in the piloting program for a digital yuan.

The Chinese central bank is looking forward to using the digital yuan during the 2022 Winter Olympic Games.

The article concludes that digital yuan can help in breaking the dollar hegemony in the international monetary system.

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Author: Joseph Kibe