ECB President Says, Cryptocurrencies Are Highly Speculative Assets That Claim Their Fame As Currency

ECB President Says, Cryptocurrencies Are Highly Speculative Assets That Claim Their Fame As Currency

Christine Lagarde says, “we have to stand ready” for CBDC, which will be available side by side with paper currencies while calling for stablecoins to be regulated.

“Cryptos are not currencies. Full stop,” said Christine Lagarde, President of the European Central Bank (ECB).

In an interview with Bloomberg this week, when asked if she thinks cryptocurrencies are a plus for the global economy or if it’s too early to tell, Lagarde blasted cryptos, saying while they possibly can be, cryptocurrencies are not currencies.

“Cryptos are highly speculative assets that claim their fame as currency.”

She then talked about the need to distinguish between cryptos that are highly speculative, even suspicious occasionally, and have high intensity in terms of energy consumption.

Lagarde also talked about stablecoins during the interview, which she said are “beginning to proliferate.” The total market cap of stablecoins has now surpassed $124 billion, with USDT, USDC, and BUSD leading the market with their respective market share at 58.5%, 23.65%, and 10.27%. Stablecoins, she said,

“need to be regulated where there has to be an oversight that corresponds to the business that they are actually conducting irrespective of how they name themselves.”

Lagarde also noted that some big techs are also trying to promote stablecoins and push along the way, which she said are “a different animal.”

Tech giant Facebook first announced its stablecoin Diem in 2019 with a plan to be backed by a wide mix of fiat currencies and government debt and instantly ran into regulatory scrutiny. Last month, David Marcus said they seek necessary regulatory clearances and have already secured approvals for its digital wallet Novi in nearly every state in the US.

Central banks are also “prompted” by the demand of customers to produce digital fiat money, “something that will make the central bank and central bank currencies fit for the century we’re in,” she said.

This is why every central bank, including the ECB and the Federal Reserve, is looking into central bank digital currency (CBDC) so that instead of having banknotes and cash, “we can have exactly the same thing. But in a digital form.”

“So all of us are working on this and certainly always keen to push the CBDC issue on our agenda because I believe that we have to stand ready for that.”

When launched, they will be available side by side with paper currencies,

“because we want customers to have their preference. If they still want to hold those banknotes and cash, fine. And it should continue to be available in the long run.”

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Author: AnTy

Treasury Yields Flip Negative as Crypto Lending Takes Off: Kaiko Report

Real yields that recently hit their lowest levels since 2003 are going down as consumer prices increase at their slowest pace in six months, making fixed-assets in classic portfolios underperform.

The crypto market has been recovering from the July 21 low of just under $1.3 trillion, having reached $2.47 trillion when earlier last week, the market experienced a small hiccup yet again.

In the past week, the market has been trying to make its way back up again but is currently struggling to break out strongly above.

Still, Bitcoin is currently trading around $46,800 and Ether at about $3,400, while the total crypto market cap is now past $2.2 trillion.

Amidst this, as we reported, lending in the cryptocurrency sector has been taking off, with DeFi stablecoins’ interest rates continuing to increase. Stablecoins’ total market cap has also grown to $123.68 billion, from less than $6 billion in March 2020.

“Treasury yields flip negative as crypto lending takes off,” noted crypto data provider Kaiko in its latest report.

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US Treasury yields went down on Tuesday after data showed that consumer prices increased at their slowest pace in six months. The consumer price index, a key inflation report, showed a 5.3% year-over-year increase for August, and Core CPI, which excludes volatile food and energy prices, rose 0.1% month over month – both slightly less than the expectations.

In reaction to this, the yield on the benchmark 10-year Treasury note fell to 1.285%, and the yield on the 30-year Treasury bond slid to 1.867%. Yields move inversely to prices.

Nonfarm payrolls, however, grew by just 235,000 in August, well below expectations of 720,000 new positions.

The Federal Reserve is currently monitoring the inflation, which it wants to see hit its 2% target and looking for strong employment results to start paring the monthly bond purchases.

Kaiko noted in its report that the Fed’s emergency monetary accommodation is what has put significant downward pressure on long-term bond returns over the past year.

“As global inflation increased and growth expectations worsened, real yields turned negative hitting their lowest levels since 2003 this past August.”

While fixed-income assets have been offering steady income flows, low volatility, and protection against falling equity valuations in a diversified portfolio over the past years, now that yields are drifting lower, the fixed-income allocation in the classic 60/40 portfolio is likely to underperform.

This combination of the ongoing low yield environment and the rising demand for liquidity in crypto markets is making the nascent crypto lending industry popular among market participants, it said.

In comparison to 0.7% per year paid by a typical savings account, even the centralized options in the crypto offer sizable returns ranging from 3% to 12%, which can get astronomical for big risk-takers.

In DeFi, the popular lending protocols Compound Finance and Aave have already launched their services specifically for institutions.

“Crypto lending allows users to supply cryptocurrencies in exchange for earning an annualized return, even in the absence of price appreciation.”

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Author: AnTy

You Wouldn’t Need Crypto If You Have CBDC; ECB & Fed Selling Their Digital Fiat As Better Than Bitcoin

You Wouldn’t Need Crypto If You Have CBDC; ECB & Fed Selling Their Digital Fiat As Better Than Bitcoin

Federal Reserve Chairman Jerome Powell on Wednesday came out strongly supporting a digital dollar, saying it could undercut the need for cryptocurrencies and stablecoins.

When asked during the congressional hearing if having a digital currency issued by the central bank would be a more viable alternative than cryptos in the payments system, Powell agreed and said:

“I think that may be the case and I think that’s one of the arguments that are offered in favour of digital currency. That, in particular, you wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had a digital US currency – I think that’s one of the stronger arguments in its favour.”

Powell said a discussion paper would be released in early September for the same, which he described as a key step in accelerating the Fed’s efforts to determine if it should issue its own central bank digital currency (CBDC).

During the hearing, Powell also shared his skepticism towards crypto assets becoming the primary payments vehicle in the US. But he does see stablecoin gaining more traction, and because of that, they need more regulation.

“We have a pretty strong regulatory framework around bank deposits,” which Powell said, “doesn’t exist currently for stablecoins.”

If stablecoins are going to be a significant part of the payments universe, which crypto assets won’t be “but stablecoins might be – then we need an appropriate regulatory framework,” Powell added.

European Central Bank (ECB) also shared similar views on the same day as it said a digital euro would be more “environmentally friendly” than the energy consumption of Bitcoin.

This comparison came as ECB announced that it had launched the investigation phase of a digital dollar project that will last 24 months. ECB President Christine Lagarde said,

“Our work aims to ensure that in the digital age, citizens and firms continue to have access to the safest form of money, central bank money.”

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Author: AnTy

40% of Institutions Personally Invested in Bitcoin; Only 10% Trading Crypto in their Investment Firms

40% of Institutions Personally Invested in Bitcoin; Only 10% Trading Crypto in their Investment Firms

Only 10% of institutional investment firms are trading cryptocurrencies, reported JPMorgan. Out of those firms who did not invest, 80% do not expect to start investing or trading in crypto.

Interestingly, when it comes to personal investments, 40% of investors said they were active in crypto assets.

These numbers are found in a survey conducted at JPMorgan’s Macro, Quantitative and Derivatives conference attended by about 3,000 investors from around 1,500 institutions.

95% of investors surveyed believe fraud in the crypto market is “somewhat or very much prevalent,” and four-fifths of them expect regulators to get tougher on the asset class.

Nearly half of investors labeled the emerging asset class as “rat poison squared,” agreeing with billionaire investor Warren Buffett while another 16% thought it was a temporary fad.

The survey further found that they expected the US benchmark stock Index to trade between 4,200 to 4,600 points by the end of 2021. Currently, at 4,241.84, S&P 500 made a new all-time high on Tuesday at $4,254.68. They also expect a dial back in central bank stimulus and inflation as key market risks.

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Author: AnTy

More Than a Third of Millennial Millionaires Have at least 50% of their Wealth in Crypto

More Than a Third of Millennial Millionaires Have at least 50% of their Wealth in Crypto: Survey

Meanwhile, none of the baby boomer millionaires has more than 10% of their wealth in crypto, with 83% of American millionaires having none of their wealth in crypto.

Almost half of the millennial millionaires have at least 25% of their wealth in cryptocurrencies, according to the CNBC Millionaire Survey of 750 investors with at least $1 million in investable assets.

About 47% of these millennial millionaires surveyed have over 25% of their wealth in crypto assets, while more than one-third of them have at least half of their wealth in crypto.

“Seems understated,” commented Su Zhu, CEO of Three Arrows Capital.

“I actually don’t know any millennials who have a reasonable amount of wealth who don’t have at least 50% in crypto.”

The survey shows that millennials are the ones who prefer cryptocurrencies to traditional assets, and this helped them make a fortune by recognizing the trend early on. This is resulting in the “industry responding,” with more and more traditional providers offering access to crypto investing.

Older people are not as interested in crypto and have been unable to really understand digital currencies, refraining from investing in them.

“The younger investors jumped on it early when it was not as well known,” said George Walper, president of Spectrem Group, which conducted the online Millionaire Survey in April and May.

“The younger investors were more intellectually engaged with the idea even though it was new. Older investors and the boomers were largely saying, ‘Is this legit?’”

This can be seen in that 83% of American millionaires have none of their wealth in crypto, with only 1 in 10 having more than 10% of their wealth in crypto assets. And none of the baby boomer millionaires or older generations has more than 10% of their wealth in crypto.

The survey also revealed the generational divide among millionaires when it comes to non-fungible tokens (NFTs), which gained mainstream attention primarily this year which makes the older generations even further behind on the understanding.

While most millionaires say, they don’t know what an NFT is, more than a third believes it to be an “overhyped fad.” But a good two-thirds of millennial millionaires say NFTs “are the next big thing.”

Nearly half of millennial millionaires surveyed own NFTs, and 40% of those who don’t currently own one have “considered” it. Comparatively, almost all the baby boomer millionaires, 98%, say they don’t own any NFTs and aren’t considering either.

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Author: AnTy

State Street Launches New Digital Division; Considering “Adding Crypto to Their Balance Sheet”

State Street Launches New Digital Division; Considering “Adding Crypto to Their Balance Sheet”

The second-oldest bank in the US with $40.3tn under custody says, “We are at a tipping point,” and is having “intense” communication with the regulators while “a lot” of (its) clients looking to launch crypto ETFs.”

State Street, the second-oldest bank in the United States with $40.3 trillion under custody at the end of March, is setting up a new digital division to keep up with the growing demand for cryptocurrencies despite the lack of regulatory clarity.

“We are at a tipping point now where this is moving fast,” Nadine Chakar, who will head State Street Digital, told FT.

“We are getting calls from endowments and foundations that are getting donations in crypto and saying what do we do with this? We are seeing companies that are thinking of adding crypto to their balance sheets.”

The company executive further emphasized that the bank’s digital opportunity goes beyond cryptos and includes using blockchain technology to make the system more efficient. “We are turning the industry upside down,” she said.

This move came just weeks after the Boston-based bank was appointed by Iconic Funds to serve as the administrator of a bitcoin-backed exchange-traded note listed on the Frankfurt Stock Exchange.

State Street, whose own fund management arm has $3.6tn under custody, is partnering with academic institutions and regulators in preparation for the launch of the digital unit.

“We will support everything in crypto services that we are allowed to support from a regulatory perspective. The level of communications back and forth with our regulators is intense.”

The bank is also keeping an eye on the Securities and Exchange Commission (SEC)’s judgment on a proposed Bitcoin ETF. Several companies have filed for an ETF, but there are yet to be approved one in the US, while Canada has several Bitcoin and Ethereum ETF approved and trading on the exchanges.

While State Street had “a lot of clients looking to launch crypto ETFs,” Chakar said it may be some time before the SEC acts on pending applications.

“If they do need more time to get it right, and provide the industry with the clarity we need, we will continue to work with our clients,” she said. “In this case, patience is a virtue. We will continue to be patient.”

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Author: AnTy

XTZ Stakers Sue IRS Over ‘Wrongful Taxation’ of Their Tezos Baking Rewards

XTZ Stakers Sue IRS Over ‘Wrongful Taxation’ of Their Tezos Baking Rewards

  • In Nashville, Tennessee, a couple is suing the U.S. Internal Revenue Service, or IRS, for wrongful taxation on rewards gained from baking (or staking) on the Tezos blockchain.
  • This lawsuit is set to shape how the taxman will treat the staking rewards across the country.

According to a filing sent to the U.S. District Court for the Middle District of Tennessee, the couple, Jessica and Joshua Jarret are asking the IRS to refund taxes paid on the staking rewards claiming they are untaxable before they are sold or exchanged.

In their claim, the Jarrett couple states the IRS should not have taxed them for the staking rewards as it “constitutes the creation of property.” In their lawsuit, the couple is asking for a refund of $3,293 paid in income taxes in 2019 to receive 8,876 XTZ tokens rewarded. Additionally, they ask for $500 compensation in tax credits for the income lost during this period.

Further digging into the document, the couple states that Federal income tax laws do not permit Uncle Sam to collect any taxes from staking rewards, compared to a baker making a fresh cake or an author writing a book. They claim since they have not had any proceeds from the “created tokens,” they should not be taxed on it. The document reads,

“Like a baker who bakes a cake using ingredients and an oven, or a writer who writes a book using Microsoft Word and a computer, Mr. Jarrett created a property.”

The Proof-of-Stake Alliance (POSA), an advocacy group tasked with bringing clarity in the legal sector of POS chains, shared the document claiming the lawsuit will have far-reaching consequences to proof-of-stake blockchains in the future. Speaking on the lawsuit, POSA founder Evan Weiss said,

“This is an issue of practical and economic importance. The wrong policy would drive innovation elsewhere … Fortunately, the correct policy is set under existing laws.”

With Ethereum set to transition into a proof-of-stake network in the coming year, the cryptocurrency community will be more aware of this law and report their staking rewards.

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Author: Lujan Odera

Nebraska Passes a Crypto Banking Bill

While at the Federal level, regulators can’t seem to wrap their heads around Bitcoin and crypto, still, on the state level, significant strides have been made towards the adoption of cryptocurrencies.

As we reported, Wyoming, Miami, Kentucky, and many other states have taken big steps towards providing a friendly regulatory environment for crypto activities and business to grow.

Nebraska is the latest one whose unicameral state legislature has passed a bill to create a state bank charter for digital asset depository institutions, similar to Wyoming’s special purpose depository institutions such as Kraken Financial and Avati Financial.

Bill 649, which is now headed to Nebraska Gov. Pete Ricketts, would create a charter that will provide institutions with places to custody their crypto assets,

“When the bill was introduced in January, there was a distance between the banking industry and the digital asset deposit institutions’ proponents,” said state Sen. Matt Williams, chairperson of the legislature’s Banking, Commerce and Insurance Committee. “It was 18 weeks of constant negotiations,” with the largest disagreement about using the word “bank.”

As such, unlike Wyoming SPDI banks, the Nebraska bill would require crypto-related institutions to use “digital assets” before “bank.”

Additionally, Nebraska’s digital asset banks won’t be allowed to accept fiat deposits. They also have a minimum reserve capital requirement of $10 billion.

Both Wyoming and Nebraska’s digital asset banks cannot lend in fiat and are required to hold 100 of its assets in reserves. Digital asset banks in Nebraska are allowed to apply for access to the Federal Reserve’s payments system.

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Author: AnTy

Almost 90% Respondents Interested in their Insurance Products Having Links with BTC: Survey

Almost 90% Respondents Interested in their Insurance Products Having Links with BTC: Survey

About 46 million Americans now own Bitcoin, representing about 17% of the population over the age of 18, according to an NYDIG survey.

Still, the majority, 53%, don’t own crypto assets, but 55% said that they would consider adding digital assets to their investment portfolio.

Another survey of 1,000 Americans by MagnifyMoney, a LendingTree division, found that 62% of crypto investors believe they’ll get rich.

The total cryptocurrency market cap has grown from $125 billion in March 2020 to more than $2.5 trillion.

A similar survey by Stone Ridge’s subsidiary New York Digital Investment Group from January stated that 80% of Bitcoin holders want to move their BTC to the bank. 71% are willing to switch their primary bank to the one that offers them Bitcoin-related products.

Conducted by Survey Monkey on March 22, a national sample of 1,050 US consumers with an annual income of at least $50k revealed that some of these crypto investors are looking to integrate the cryptocurrency into their personal financial plans, first reported Newsweek.

The survey findings say that respondents wanted to learn more about Bitcoin annuities and life insurance.

About half of the respondents said they want to receive some or all of their insurance benefits in BTC, while nearly 90% said they had some interest in annuity or insurance products with indirect links to BTC.

Furthermore, while 43% find it acceptable that their insurance carrier invested less than 2% of cash in Bitcoin, 42% also said they might be okay with it, with only 15% saying they didn’t like the idea.

“The finance industry is taking crypto mainstream by building Bitcoin into their insurance, banking, & investment products,” noted Michael Saylor, CEO of MicroStrategy.

NYDIG, which recently tapped the CFO of the world’s largest hedge fund Bridgewater Associates as its chief financial officer, has raised millions of dollars from insurance giants like New York Life and MassMutual.

Return-hungry insurance companies have actually been buying bitcoin for their general accounts through the firm with interest rates hovering near zero and a depreciating dollar making bitcoin appear more attractive, said Ross Stevens, the founder and executive chairman of NYDIG, in December.

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Author: AnTy

Turkey Tightens Crypto Regulations over Transaction Volumes

  • Turkey has started to toughen their grip on the cryptocurrency sector.
  • Turkey’s financial watchdog, the Financial Crimes Investigation Board or MASAK, has introduced a new policy that stipulates that all Turkish crypto exchanges must now inform them of any crypto transactions over 10,000 Turkish liras ($1,200).
  • The new policy was announced by the Turkish Minister of Treasury and Finance Lütfi Elvan.

Turkey Lays Down New Regulations For Crypto Exchanges

Elvan shared the new policy and other updates on the government’s crypto regulation drafts on a CNN Turk live broadcast.

According to the Finance Minister, the government plans to give MASAK the authority to audit and oversee crypto exchanges and regulate the crypto sector, as a whole.

Elvan said MASAK had prepared a guideline for crypto exchanges that includes the rules and penalties for reporting transactions. Elvan said,

“Crypto trading platforms are now obliged to share the information of their active users with MASAK. They are liable for any suspicious activities on their platforms. They are also responsible for notifying MASAK about any transactions worth over 10,000 Turkish liras in 10 days after the trading.”

This new regulation comes after Turkey’s central bank banned cryptocurrency as a form of payment. The bank had said crypto assets involved significant risks due to their volatile nature and may lead to irreversible losses to investors. It also added that they were used for illegal activities.

Turkey’s Recent Moves Surrounding Cryptocurrency

The country, which was once referred to as a crypto-friendly country because of its subtle approach towards digital assets, is rapidly cracking down on the cryptocurrency sector.

In March, the Finance minister posted a statement on Twitter where he expressed concerns about cryptocurrencies. He also announced that the ministry was working with the central bank and two financial regulatory agencies to monitor cryptocurrency.

Turkish investors turned to crypto in a bid to protect their savings from the weak Lira. Many believe the government is looking into regulating the market due to concerns around fraudulent activity.

One prime example of this is the case involving crypto exchange Thodex, which was accused of defrauding investors. About 391,000 investors on the platform were said to have been prevented from accessing their assets which were estimated to be $2 billion in investments. The Turkish police detained 62 people in connection with the case following complaints from users.

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Author: Jimmy Aki