G7 Finance Ministers Strongly Support Regulating Digital Currencies

Central bankers and finance ministers from the Group of Seven (G7) advanced economies have “strong support” on the need to regulate digital currencies. The U.S. Treasury Department in a statement after a virtual meeting of the officials on Monday. Steven Mnuchin, the current US Treasury Secretary, tweeted,

“Productive #G7 call this morning. We discussed the effective actions in response to COVID19, strategies to achieve a robust recovery, and cryptocurrencies.”

The official discussed domestic and international responses to achieve a robust global recovery along with the responses to the “evolving landscape of crypto assets and other digital assets and national authorities’ work to prevent their use for malign purposes and illicit activities,” the statement reads.

Facebook’s stablecoin Diem (renamed from Libra just last week), in a statement after the video conference, German Finance Minister Olaf Scholz said it would take more than renaming the cryptocurrency to address regulators’ concerns regarding its launch in Germany and Europe. He added,

“A wolf in sheep’s clothing is still a wolf.”

“It is clear to me that Germany and Europe cannot and will not accept its entry into the market while the regulatory risks are not adequately addressed.”

“We must do everything possible to make sure the currency monopoly remains in the hands of states.”

Read Original/a>
Author: AnTy

Fear of Libra’s Stablecoin Replacing Domestic Currencies Is Greatly “Overstated:” Fed Reserve

Federal Reserve economists disclose that project Libra’s ability to disrupt economies may have significantly been “overestimated” and overstated by policymakers.

The report released on Monday shut down the extremist’s statements that the earlier version of one Libra stablecoin could replace the global economic systems as we know them today. The report arose from a prototype based on a worldwide cryptocurrency hypothetical.

Two Federal Reserve economists reveal that the initial model of Facebook’s stablecoin Libra release in mid-2019. The meticulous report focuses on a model based on several stablecoins backed by several domestic currencies and the impact it has on being adopted or replacing the domestic fiat currencies hypothetically.

Regulators against Libra and global digital stablecoins

Libra project has received extensive criticism from various financial authorities and regulators across several regulations. Financial watchdogs such as the G20’s Financial Stability Board (FSB) flagged the project arguing that scenarios where payment outages were to occur in economies that would be highly dependent on the global stablecoins. US legislature also attempted to stop the project in its tracks with French Financial Minister opined that it could lead the ouster for sovereign currencies.

However, Garth Baughman and Jean Flemming’s report has seemingly discredited the narrative. It reveals that as much as the stablecoin may have the potential to be adopted by countries internationally, the day to day use of Fiat currencies would ensure that the stablecoins demand never surpasses the currencies backing the coin.

“Our estimates suggest that there must be significant benefits in addition to those we study here to achieve widespread adoption of basket-backed stablecoins.”

A new path for Libra project

Notably, the Libra Association has now shelved its ambition of offering a stablecoin pegged on a basket of currencies. Instead, they intend to zero in on independent digital backed fiat currencies as the digital wallet Calibra, CEO David Marcus had predicted at the close of last year at a banking conference. This sudden turn around could be attributed to the hostility and regulatory scrutiny they have received from the governments.

“Instead of having a synthetic unit … we could have a series of stable coins, a stable dollar coin, a stable euro coin, a sterling pound stable coin, etc.”

They recently onboarded Mr. Stuart Levey, the former Chief Legal Officer at HSBC, as their new CEO. They believe that his vast experience in compliance would steer them from their current regulatory crunches that hinder overlap with the legal feasibility of the project.

Read Original/a>
Author: Lujan Odera

Market Turmoil Can Bring Capital Controls Back But They’ll Be Good for Crypto

Last month, the coronavirus outbreak and the collapse of oil prices had stock markets crashing and economies come to a standstill with countries in lockdown. In response, central banks have announced stimulus programs.

The coronavirus crisis also affected the capital flows and raised the question of whether currency control would be back too, especially in emerging markets.

In February and March, about $80 billion got wiped out from emerging stocks and bonds.

“There is some early evidence of an unprecedented collapse in global capital mobility which, if sustained, will make it tempting for countries to conserve their FX resources by imposing restrictions on capital outflows,” said David Lubin, head of emerging markets economics at Citi.

This would certainly be the case if the governments offered full compensation for losses inflicted by lockdowns.

Capital Controls could be back

The Fed and IMF have backed the use of capital controls in certain situations while the US has opposed them since Bretton Woods. Back in December, Bilal Hafeez, the CEO of financial strategy firm Macro Hive said US capital controls could be the grey swan, which is basically significant events that are considered unlikely to happen but are still possible.

China has been implementing capital controls, last year it rolled out a new set of currency controls to curb down on a capital flight from the country.

In emerging markets (EMs), the issue of investment flow is especially important because when capital inflows disappear, those that rely on that capital “suffer big demand collapses.”

Last week’s sell-off in emerging market currencies have been on pace with that during the 2008 global financial crisis, as per JP Morgan. Fiat currencies have fallen 10 to 20%.

As such capital control could be a reality, however, for now, currency pressures have eased following massive cash injections by the Fed to weaken the dollar.

Cryptos ideal conduit to bypass them

Back in 2008 and 2015, Iceland and Greece respectively resorted to them. Emerging markets see capital controls as a measure of the last resort.

Nigeria introduced capital curbs in late 2014 after an oil price shock ravaged its economy.

Last month, Lebanon held meetings to discuss capital control aimed at the regulation and setting exceptional temporary controls on some operations and banking services, as per the National News Agency.

Argentina imposed curbs in September to conserve its diminishing dollar reserves and stop a peso run. This saw the demand for stablecoin DAI explode in the country.

The implementation of capital controls is good for crypto and gold. One can purchase the bullion and store it offshore and legally circumvent the control.

“Capital controls are relevant for crypto, as the imposition of capital controls generates demand to bypass capital controls … and crypto assets can be an ideal conduit for doing so,” said economist and trader Alex Kruger.

Read Original/a>
Author: AnTy

People’s Bank of China Injects $174M Into Economy, More Than Bitcoins Entire Market Cap

While economies all over the world are functioning at a slower pace, central banks are trying to prevent a collapse by flooding more money into their markets, with China injecting the entire Bitcoin (BTC) market cap into the system.

In other words, People’s Bank of China (PBoC) intends to increase the sum of 1.2 trillion yuan into the market, in an effort to fight the financial instability due to the Coronavirus outbreak. Crypto enthusiasts have noticed this and are preparing for stormy weather when it comes to the economic activity in the country. Coronavirus killed more than 300 Chinese people and infected another 14,350. It started at the same time the markets were closed for the lunar New Year’s holidays.

The US Federal Reserve Has Injected Billions of Dollars Since September 2019

Repurchase agreements and banking bailouts are meant to increase commercial banks’ liquidity while the new money enters the system. Last year in September, the US Federal Reserve has injected billions of dollars into the US market, with President Trump also offering bonuses and tax cuts to banks and billionaires. This is the announcement made by PBoC yesterday when it comes to the 1.2 trillion yuan:

“Inject 1.2 trillion yuan via reverse repo operations on February 3 to ensure sufficient liquidity supply. The liquidity of the overall banking system will be 900 billion yuan more than the same period of last year.”

Bitcoin Comes to Solve Economic Problems

This weekend, Chinese authorities have announced 30 measures for bolstering the economy and combating the disruption caused by the Coronavirus outbreak. What a decentralized tamper proof currency with fixed inflation and a finite supply would do has been discussed very intensely too.

BTC is becoming more and more appreciated during economic adversity, with China turning to it even from before the viral outbreak. More than this, the country already has an important role in moving BTC. The central bank is only advocating the asset’s immunity to monetary manipulation.

Read Original/a>
Author: Oana Ularu

Despite a Love or Hate Relationship, New Futures Investments Are Making Cryptos More Popular

Futures markets can help economies to grow a lot, but some people see them as very speculative. The situation would not be different in the case of crypto futures, which are even more speculative to some experts but are helping the market to grow.

Bloomberg has recently published an article affirming that Bitcoin futures show how the market has matured. According to the post, futures went from almost being meaningless to around 50% of all the spot trading activity in the market in just a couple of years.

What consequences has this brought to the market? The investor base has grown in numbers and the volatility has been decreased during this timeframe.

Crypto futures are so popular right now that most crypto exchanges are offering them together with services of lending and borrowing cryptocurrencies. This makes it very easy for crypto holders to make considerable profits just using these financial tools.

The article also notices that the volumes of contracts in traditional exchanges that started their futures during 2017 such as the Chicago Mercantile Exchange (CME) have doubled their volume in 18 months. This shows that, despite being still a small market, the growth has been exponential so far.

While there are still doubts among some investors about if cryptos will represent a revolution in the markets or not, the fact is that they can be pretty profitable right now.

New exchanges such as the Intercontinental Exchange’s Bakkt have just appeared and will probably leave their mark in the industry, too. With all these improvements, it is hard to see a future in which cryptocurrencies will not be popular investments.

Read Original/a>
Author: Hank Klinger

These Are Four Fiat Currencies Have a Value Under 1 Satoshi, Bitcoin’s Smallest Unit of Value

These Are Four Fiat Currencies Have a Value Under 1 Satoshi, Bitcoin's Smallest Unit of Value

The price of Bitcoin just keeps growing as many economies in the world are in pure turmoil. This has made the price of the tokens increase (at the time of this report, Bitcoin was being traded with the price of over $9,000 USD, the highest in the year until now) while fiat currencies are still being destroyed by hyperinflation all over the world.

If you want the ultimate proof that the economy is very grim for many of these countries, you can see this list, which was originally created by NullTX. It has four different fiat currencies that were valued at 1 Satoshi, which is equal to 0.000001 BTC (about a ninth of a cent in the U. S.).

Currenies Valued Less than 1 Satoshi

Paraguayan Guarani (PYG)

Paraguay is known for not having a very stable economy. In fact, the issue goes way back the time in which the country was attacked by Brazil, Uruguay and Argentina… in 1864. That’s right. The economy of the small country was so affected by the many deaths of the war that they never really recovered fully and the country is still very poor.

At the moment, the value of the Paraguayan Guarani (PYG) is far from looking very healthy, as the country’s unit is worth only $0.00016 USD. You would certainly need more than 100 million PYG in order to buy a single Bitcoin.

Laotian Kip (LAK)

With a domestic currency that is worth only 0.00011 USD, the Laotian Kip (LAK) is far from a good unit of money. The country of Laos is not the kind of place that makes the economic headlines for success, although it cannot be considered one of the worse countries of the world.

While the economy of the country does not get better, we will probably not see the LAK getting more value than it has right now.

Guinean Franc (GNF)

The Guinean Franc (GNF) is worth the same as the Laotian Kip, 0.0001 USD. As you can imagine, this is far from exciting for the country, which is considered very poor and it lacks in several areas such as infrastructure.

Again, there is not much hope that the situation for this fiat currency will improve anytime soon, unfortunately.

Sierra Leonean Leone (SLL)

The final of the fiat currencies that are worth less than a single Satoshi is the Sierra Leonean Leone (SLL). At the moment, the unit of this currency is valued at 0.00011 USD. This happened mostly because Serra Leone is not a very stable region politically and its economy has several issues.

Inflation has destroyed the value of the token so much that even with a very high nominal value of SLL you actually will not have a lot of money.

Read Original/a>
Author: Gabriel Machado