U.S. Treasury Janet Yellen calls for ‘strong regulatory framework’ for crypto activities

February 25, 2023 Coin Telegraph

CBDC

On the sidelines of the G20 meeting, U.S. Treasury Secretary Janet Yellen said the country is not pushing for an outright banning of crypto activities.

United States Treasury Secretary Janet Yellen stressed the importance of implementing a strong regulatory framework for cryptocurrencies during a G20 meeting on Feb. 25.

Speaking to Reuters, Yellen said that it was "critical to put in place a strong regulatory framework." She also noted that the United States is not suggesting an "outright banning of crypto activities."

Yellen's remarks follow earlier ones from the International Monetary Fund (IMF) Managing Director Kristalina Georgieva, stating that banning crypto should be an option:

"There has to be very strong push for regulation... if regulation fails, if you're slow to do it, then we should not take off the table banning those assets, because they may create financial stability risk."

In addition, Georgieva pointed out to reporters that it is necessary to differentiate central bank digital currencies (CBDCs) from stablecoins and cryptocurrencies - which are issued by private companies.

In an earlier conference, the first G20 Finance Ministers and Central Bank Governors (FMCBG) meeting under India’s presidency addressed key financial stability and regulatory priorities, Cointelegraph reported.

The country's Finance Minister Nirmala Sitharaman called for a coordinated global policy to address the macro-financial implications of crypto assets. Sitharaman has historically supported working with other jurisdictions in the development of crypto regulations. For several years, India's government has debated whether to regulate or even ban cryptocurrencies.

On Feb. 23, the IMF released an action plan on crypto assets, urging countries to abolish legal tender status for cryptocurrencies. The paper, titled “Elements of Effective Policies for Crypto Assets,” outlined a framework of nine policy principles addressing macrofinancial, legal and regulatory, and international coordination issues.

After a visit to El Salvador earlier this month, the IMF suggested the country reconsider its plans to increase exposure to Bitcoin, citing the cryptocurrency risk to El Salvador's fiscal sustainability and consumer protection, as well as its financial integrity and stability.

Commodity Strategist Mike McGlone Predicts a Recession as Top Catalyst for Gold’s Rise Above $2,000

February 24, 2023 Bitcoin.com

IMF offers Jordan’s central bank recommendations for implementing retail CBDC

February 24, 2023 Coin Telegraph

CBDC

The IMF mission spent three months studying conditions in the country, which is preparing to produce a feasibility report.

The Central Bank of Jordan is closer to its next step toward a retail central bank digital currency (rCBDC) with the completion of an International Monetary Fund (IMF) technical report on the country’s markets. The IMF conducted a three-month mission last year to assist the bank with preparations for a CBDC feasibility report. The IMF released its report Feb. 23.

Working between July and September 2022, the IMF gave the country’s existing retail payment market a largely positive review, calling it well-integrated. Two nonbank payment service providers (PSPs) have “generally accessible and appropriate product” and the country has high smartphone penetration, the report noted.

Nonetheless, an rCBDC would enhance financial inclusion by providing services to residents without smartphones. An rCBDC could also improve the domestic payment system by making its infrastructure available to PSPs and lower the cost of cross-border transfers.

Jordan IMF technical assistance on retail Cross Border Digital Currency (rCBDC): "a cross-border rCBDC could add value, particularly if the authorities coordinate with other countries in the region." #CBDC https://t.co/zlTeY8waB9
— Kevin Carey (@Kevin_Carey_WB) February 22, 2023

The IMF warned to avoid disintermediation in the Jordanian financial system, as it could contribute to instability in times of stress. The Jordanian financial sector has good information security governance and management practices, the IMF found, but an rCBDC could increase cybersecurity risks as an attractive target. “Sound legal underpinnings for an rCBDC should also be created, the report said. It concluded:

“rCBDC may offer some benefits, but it does not necessarily address pain points. On the other hand, a cross-border rCBDC could add value, particularly if the authorities coordinate with other countries in the region.”

Low financial literacy and a persistent cash culture are among the pain points an rCBDC would not address.

The Jordanian central bank announced it was researching a CBDC in February 2022. Cryptocurrency trading is illegal in Jordan. A central bank proposal to introduce crypto trading met with resistance in the parliament.

Bitcoin must leverage $1T central bank liquidity to beat sellers — research

February 22, 2023 Coin Telegraph

Bitcoin

BTC price action is all but guaranteed to benefit from extra central bank liquidity, but the journey higher is fraught with difficulty, says QCP Capital.

Bitcoin (BTC) hodlers need to watch the central banks of China and Japan as well as the United States as BTC/USD battles “huge” resistance.

That was the opinion of trading firm QCP Capital, which in its latest crypto market research piece, “The Crypto Circular,” warned that Bitcoin faces risks far beyond the Federal Reserve.

Bitcoin "most direct global liquidity proxy"

Having survived the latest flood of macroeconomic data from the U.S., Bitcoin is nonetheless flagging right below $25,000 as bulls run out of momentum.

For QCP Capital, there is now reason to believe that risk factors for price performance will come not just from the Fed but China and Japan.

Market participants must now contend with such issues as China’s Consumer Price Index (CPI) as well as the U.S. equivalent, along with Japanese central bank policy changes.

“While the jury is out on BTC’s value as an inflation hedge, it cannot be denied that it is the most direct global liquidity proxy, as it is not tied to any one central bank or nation,” the research argues.

Bitcoin is sensitive to global liquidity, and when central banks inject it, this marks an incentive for growth in and of itself. That argument is already popular, with others also eyeing how “liquidity junkie” Bitcoin will navigate changes in central bank liquidity this year.

“And while we were focused on USD liquidity – from the Fed’s QT and Reserve balance, we’ve missed the massive liquidity injection by the Bank of Japan (BOJ) and People’s Bank of China (PBOC) over the past 3 months,” QCP continues.

“Contrary to consensus, central banks have net added $1 trillion of liquidity since the market’s bottom in October 2022, with the PBOC and BOJ the largest contributors.”

QCP refers to the dichotomy between U.S. policy and China and Japan — quantitative tightening (QT) versus quantitative easing (QE). Regardless of what the Fed does, extra liquidity in one place is all but guaranteed to trickle into risk assets such as crypto.

“Hence, such a large injection of liquidity will no doubt find its way to crypto, even despite what appears to be the current US administration’s best efforts to prevent that,” it says.

Versus net $1 trillion liquidity injections, the Fed has reduced its balance sheet to its lowest levels since September 2021.

“What this means is that apart from US data and Fed guidance now, which ultimately still holds the highest beta for market moves, we also have to be conscious of BOJ and PBOC liquidity injections,” QCP writes.

“Any reversal of liquidity from these 2 sources would remove the underlying support that BTC has seen this past month.”

*Fed balance sheet chart (screenshot). Source: Federal Reserve*

Research reiterates "double top" warning

Going forward, however, liquidity fans face formidable resistance when it comes to Bitcoin, with order books showing sellers lying in wait en masse closer to $30,000.

$25,000 is already causing enough problems, QCP warns, acknowledging that rejection at that level would mean that resistance from mid-2022 remains in control.

As Cointelegraph reported, that issue is also being watched by popular trader and analyst, Rekt Capital.

#BTC is pulling back in for a retest

Needs to hold the confluent area below for the retest to be successful$BTC #Crypto #Bitcoin https://t.co/ISYqnU5bkY pic.twitter.com/Vx2eV3fLDA
— Rekt Capital (@rektcapital) February 22, 2023

“BTC – A potential double top is forming against the August 2022 correction high, and May 2022 reaction is low at 25,300. Above that we have the huge 28,800-30,000 resistance which is the Head and Shoulders neckline,” the research confirms.

BTC/USD traded at around $23,700 at the time of writing, near one-week lows, according to data from Cointelegraph Markets Pro and TradingView.

*BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView*

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

BIS head claims fiat won battle with crypto, Bitcoin community disagrees

February 22, 2023 Coin Telegraph

BIS

BIS General Manager Agustín Carstens reckons the war between fiat and crypto has been won by fiat. The community would tend to disagree.

The Bank for International Settlements (BIS) has long taken a cautious approach to Bitcoin (BTC) and cryptocurrencies. No need for caution anymore, however, as the “battle has been won” between fiat and crypto, according to BIS.

BIS general manager Agustín Carstens, who made the claim, highlighted that “technology doesn’t make for trusted money,” among further criticisms of crypto in an interview with Bloomberg.

Crypto has lost the argument that it's an alternative to fiat currency, the head of the Bank for International Settlements says https://t.co/xZKFHEj3b2
— Bloomberg Crypto (@crypto) February 22, 2023

As the central bank for central banks, the BIS has emphasized the need for regulation and risk management in the crypto space–but claiming the fiat battle has been won sparked outrage, satire and corrections among the Bitcoin and crypto community.

Ray Youssef, CEO of Paxful and vocal Bitcoin maximalist told Cointelegraph that it's "easy to get sucked into these battles but is all a distraction with no ROI." He continued, "We must focus on the battles in the global south and fight for every inch and every eyeball. What is happening in Nigeria now is vital for us all."

"Want to p*ss the clowns off? Ignore their FUD bait and focus all in on the global south and what is happening on the streets of nigeria."

Bitcoin author Saifedean Ammous brought the BIS story to his followers’ attention, provoking condemnation and concern in the comments. Florida-based Bitcoin advocate called SVN (not his real name), whose frozen bank account prompted a switch to going all in on Bitcoin, told Cointelegraph that "These people are clowns.”

Meanwhile, Lady Anarki, a Bitcoin advocate based who recently closed a Bitcoin Security Education company explained that “fiat and crypto are essentially the same exact scam.”

“For fiat, it is nefarious elite oligarchs creating a rigged game system to enrich themselves while making everyone else poorer. Bitcoin is a technology designed with incentives and sound economic principles that enriches anyone who brings value to the world.”

Bitcoin losing the "war" for money, as Carstens explained, is another reference to the fact that Bitcoin has been declared dead, dead and dead again. The 2022 and 2023 bear market is no different, and Bitcoin advocates on Twitter seized the opportunity to mock financial experts dancing on the imaginary grave of the decentralized currency.

Nonetheless, Bitcoin is up over 40% from its 2022 lows, and Lightning Network adoption flourishes while the community appears increasingly vocal.

What Bitcoin Did, the popular podcast hosted by football club owner Peter McCormack–number 38 on Cointelegraph’s Top 100–tweeted some handy statistics to correct another inflammatory statement published by the BIS this week. Notably, from August 2015 to December 2022, the BIS explained that “nearly all economies made losses on their Bitcoin holdings.”

BIS analysis: Aug ‘15-Dec ‘22 “majority…in nearly all economies made losses on their #Bitcoin holdings”

Facts:
-Majority of global fiat lost value to USD since 2015
-USD has lost over 26% of its own value due to inflation#Bitcoin has gone up nearly 8000%

Facts be sticky pic.twitter.com/mMyBzuVhWz
— What Bitcoin Did (@WhatBitcoinDid) February 21, 2023

As shown, the Bitcoin price continues to trend higher despite the BIS' best efforts to the contrary.

The BIS has been a vocal critic of cryptocurrencies in the past, citing concerns about their volatility, scalability, and energy consumption. However, the BIS has also researched stablecoins and central bank digital currencies, juxtaposing Carsten's comment in the Bloomberg interview that tech “doesn’t make for trusted money.”

Willem Middelkoop, author and Bitcoin advocate, highlighted that the war between fiat and crypto is far from over. A cursory scroll on the original Bloomberg Crypto tweet would suggest that the war is just heating up.

eNaira is ‘crippled‘: Nigeria in talks with NY-based company for revamp

February 21, 2023 Coin Telegraph

Africa

After multiple attempts to create an efficient digital currency, the Central Bank of Nigeria is turning to a New York tech firm to revamp the underlying technology.

The Central Bank of Nigeria (CBN) continues to develop its central bank digital currency (CBDC), the eNaira, but this time it’s calling for backup.

According to a Feb. 21 Bloomberg report, the CBN is in talks with new “technology partners” to develop a new and improved system to manage the eNaira.

According to sources close to the matter, the Nigerian financial authority has discussed these plans with the New York-based technology firm R3.

New software for the eNaria will be created to allow the CBN to have complete control over the initiative; however, the unnamed source said the matter is confidential.

The effort to create the eNaira began in 2021 with the help of the financial software company, Bitt. According to the report, the new partner won’t immediately take Bitt’s role but will help phase in total control for the Nigerian central bank.

In a statement, Bitt said it is aware that the CBN works with various partners for its technological innovations. It confirmed that it still works closely with the CBN and is “currently developing additional features and enhancements.”

Although it is one of the first countries to have launched a CBDC, Nigeria’s eNaira got off to a sluggish start, with low adoption. According to some reports, the ambitious project is “crippled,“ with only 0.5% of Nigerians using the CBDC.

In January, a Nigerian innovator launched the country’s first active Bitcoin Lightning node. Shortly before that, the government announced its plan to create a legal framework for stablecoins and Initial coin offerings.

Nigeria is one of more than 90 countries exploring the use of CBDCs. Others include Russia and Japan, both of which have plans to roll out their currencies before the summer. The city of San Francisco is also looking into the possibility of developing a CBDC system.

However, there is active pushback against CBDCs from activists who call them “surveillance” tools.

Bank of Russia to Start Testing Digital Ruble With Real Users on April 1

February 20, 2023 Bitcoin.com

Russia to roll out CBDC pilot with real consumers in April

February 17, 2023 Coin Telegraph

Bank of Russia

Russia’s central bank is preparing to launch the first consumer pilot for the digital ruble in collaboration with 13 local banks.

The Bank of Russia is preparing to roll out the first consumer pilot for the nation’s central bank digital currency (CDBC) on April 1, 2023.

The central bank of Russia is set to debut soon the first real-world digital ruble transactions involving 13 local banks and several merchants, first deputy governor Olga Skorobogatova said.

The official noted that the upcoming CBDC pilot will involve real operations and real consumers in Russia, but will be limited to a certain number of transactions and customers, the local news agency TASS reported.

“We plan to launch the digital ruble project on April 1, with transactions involving individual transfers as well as payments in trade and service enterprises,” Skorobogatova stated at the Ural Forum Cybersecurity in Finance. She added that the banks participating in the pilot have technically confirmed their readiness to start testing the digital ruble.

The deputy governor clarified that general customers will not be able to take part in the pilot in the first stage, as the banks are going to enter the pilot with chosen customers. Following the first pilot stage, the Bank of Russia is planning to determine how to further scale the digital ruble, Skorobogatova stated.

*Bank of Russia’s first deputy governor Olga Skorobogatova. Source: Bank of Russia*

The latest announcement by Skorobogatova follows the roadmap of the digital ruble rollout that the officially introduced in June 2022. Initially scheduled for 2024, the consumer CBDC pilot was moved to an earlier date as the Russian central bank was looking for an alternative to SWIFT amid Western economic sanctions against Russia.

The news comes amid some Russian officials claiming that the Bank of Russia is considering a potential gold-backed token targeting cross-border transactions. Bank of Russia’s first deputy governor Vladimir Chistyukhin believes that such a “golden token” will help Russia not only create a new attractive investment product but also build a demanded payment method in international settlement.