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UBS Strategists Predict Minimal Impact of Upcoming Mt Gox Payouts on Bitcoin Value

UBS Strategists Predict Minimal Impact of Upcoming Mt Gox Payouts on Bitcoin ValueA recent report published by market strategists from the investment bank and financial services company UBS says that the upcoming Mt Gox payouts won’t destabilize bitcoin’s value. While a new supply will come to the market, UBS strategists insist that “it would be less concentrated.” UBS Market Strategists Believe Mt Gox Payouts Won’t Destabilize Bitcoin’s […]

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

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

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.

Related: IMF exec board endorses crypto policy framework, including no crypto as legal tender

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.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Huobi crypto exchange aims to expand to Hong Kong amid regulatory changes

The cryptocurrency exchange recently cut 20% of its staff, but now it will increase personnel in Hong Kong from 50 to 200.

Cryptocurrency exchange Huobi Global is seeking a license in Hong Kong, as the Chinese special administrative region considers new licensing and regulatory moves that would allow them to serve retail customers.

The new framework, which requires crypto exchanges to register with the Hong Kong Securities and Futures Commission (SFC), would allow the exchange to expand its services to the city. Huobi also plans to open a new exchange named Huobi Hong Kong that would concentrate on institutional and high-net-worth individuals, according to a tweet thread by Justin Sun.

The SFC has recently opened the new Hong Kong licensing proposals for public comment, with the new regime to go into effect in June. News of the expected changes led to financial services providers lining up to take part in the new, expanded system in December.

Sun said in an interview with Nikkei Asia that Huobi may increase its staff in Hong Kong from 50 to 200 this year. Sun said Hong Kong’s friendlier stance on crypto and the possibility of retail sales motivated the expansion.

Related: Huobi delists 33 tokens in one day, citing trading risk, low volume

Huobi announced a layoff of 20% of its staff in January, characterizing it as part of the company’s restructuring after Sun’s takeover in October. The exchange announced in February that it was closing down its Huobi Cloud Wallet in May, due to “strategic and product adjustments.“

According to Nikkei Asia, Huobi is also considering moving its headquarters to Hong Kong from Singapore.

Huobi is expanding services in other regions as well. It announced in January that it is launching a Visa-backed crypto-to-fiat debit card that Huobi customers residing in the European Economic Area will be able to use worldwide. That card is expected to be available in the second quarter of this year.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Bank of England thinks digital pound can co-exist with private stablecoins

The central bank wants an e-GBP to be retail-focused and could form part of a “mixed payments economy” alongside cryptocurrency stablecoins.

The United Kingdom is a step closer to launching a central bank digital currency (CBDC) after releasing a consultation paper explaining the proposed digital pound, which the public has nicknamed “Britcoin.”

The 116-page consultation paper was jointly released on Feb. 7 by the Bank of England (BoE) and the U.K. Treasury. A technology working paper was also released delving into the technical and economic design considerations.

Despite the rise of privately-issued stablecoins in recent years, the paper said that CBDCs such as the digital pound can co-exist in what they expect to be a “mixed payments economy.”

“In much the same way that cash exists alongside private money, the digital pound does not need to be a dominant form of money in order to meet its public policy objectives. The digital pound could exist alongside other forms of money, including stablecoins.”

While the BoE and the Treasury hope to have a digital pound launched by 2025 “at the earliest,” at this stage, they’re still not 100% certain that it will be launched at all.

“The Bank and HM Treasury consider a digital pound is likely to be needed in the UK though no decision to introduce one can be taken at this stage,” the paper stated.

The paper explained the primary motivator behind launching the digital pound is to ensure U.K. central bank money remains “an anchor for confidence and safety” in the country’s monetary system and to “promote innovation, choice, and efficiency in domestic payments.”

The model for the digital pound as outlined in the consultation paper. Source: Bank of England.

To achieve this feat, the e-GBP would need to be largely adopted in the retail ecosystem through a series of “public-private partnerships.”

“For the digital pound to play the role that cash plays in anchoring the monetary system, it needs to be usable and sufficiently adopted by households and businesses.”

Users will be able to access e-GBP by connecting to private sector-run API that in turn connects to the core ledger.

The platform model of the digital pound. Source: The Bank of England.

Other programmability features including smart contracts and atomic swaps — which enables assets to move across networks — will be enabled.

While the paper states the private sector would help build such infrastructure, it also considers imposing individual limits between 10,000 to 20,000 British pounds ($12,000 to $24,000) to essentially prevent its use as a savings account:

“A limit on individual holdings would be intended to manage those risks by constraining the degree to which deposits could flow out of the banking system. That is important during the introductory period as we learn about the impact of the digital pound on the economy.”

Privacy concerns that many in the crypto community have voiced were also acknowledged. Without going into detail, the paper stated an e-GBP would be subject to “rigorous standards” of privacy and data protection.

It further explained that users will “have at least some level of privacy” because transactions will be recorded anonymously on the core ledger.

The paper said a “digital pound will not be anonymous” as user verification is needed “to prevent financial crime” but added neither the government nor the BoE would have access to personal data. Source: The Bank of England

Related: Bank of England governor questions need for digital pound

The paper outlined, however, that an e-GBP may impact the business models of commercialized banks through what is known as “bank disintermediation” — where fewer deposits are made into commercial banks.

“The digital pound would not fundamentally alter the traditional channels of money creation, but it might affect monetary stability. [...] Bank disintermediation might affect the transmission of monetary policy to the real economy,” the consultation paper stated.

The central bank also believes the digital pound could bring about more financial inclusivity among the U.K. population.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Retail giant Pick n Pay to accept Bitcoin in 1,628 stores across South Africa

Grocery retailer Pick n Pay is expanding its Bitcoin coverage to all stores in the country following a three-month pilot testing phase.

The South African grocery retailer Pick n Pay is expanding its Bitcoin (BTC) coverage to all 1,628 stores across the country following a three-month pilot testing phase in 39 locations. 

As part of its nationwide rollout, store customers will be able to pay for items using cryptocurrency via smartphone apps or by scanning a QR code and accepting the South African rand's conversion rate at the time of payment.

To pay with BTC, customers will need a Bitcoin Lightning Wallet and the CryptoQR scanner app from CryptoConvert, which is linked to the Bitcoin Lightning Wallet. The payment process requires users to scan an item's QR code through the CryptoQR app and then proceed to the Lightning Wallet to confirm the rate and complete the transaction.

Related: South African crypto landscape primed for TradFi growth after FSCA ruling

Twitter users shared their experience with using Bitcoin to pay for everyday items at Pick n Pay stores:

The move came after the country's financial regulator, the Financial Sector Conduct Authority (FSCA), amended its financial advisory legislation in October 2022 to classify crypto assets as financial products, bringing cryptocurrencies under regulation for the first time in South Africa, and allowing financial service providers to offer crypto-assets both domestically and internationally.

The retail chain disclosed plans to roll out crypto payments nationwide in November 2022, after years piloting the service in selected stores. A first experiment with cryptocurrencies took place in 2017, when the company began accepting Bitcoin as a form of payment in Cape Town, but transaction costs and wait times hindered the process.

During its pilot program, Pick n Pay partnered with Electrum and CryptoConvert to enable customers to pay via the Bitcoin Lightning Network, a second layer added to Bitcoin’s blockchain that allows off-chain transactions

Among the African nations, South Africa appears to be making considerable progress in adopting cryptocurrency. South Africa ranks 30th globally in terms of cryptocurrency adoption according to Chainalysis' 2022 Global Crypto Adoption Index. It has been estimated that about 10% to 13% of the South African population holds crypto assets.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Using blockchain technology to combat retail theft

Blockchain technology may be a solution when it comes to anti-theft measures for retailers.

The retail industry is one of the most important sectors of the United States economy. Unfortunately, the COVID-19 pandemic has left the trillion-dollar retail sector vulnerable to in-store theft. 

Findings from the National Retail Federation’s 2022 Retail Security Survey show that retail losses from stolen goods increased to $94.5 billion in 2021, up from $90.8 billion in 2020. Some retailers also have to lock away certain products to prevent theft, which may lead to decreased sales due to consumers’ inability to access goods.

Retailers look toward blockchain to solve retail theft

Given these extreme measures, many innovative retailers have started looking toward technology to combat retail theft. For example, Lowe’s, an American home improvement retailer, has recently implemented a proof-of-concept called Project Unlock, which uses radio frequency identification (RFID) chips, Internet of Things sensors and blockchain technology. The solution is currently being tested in several Lowe’s stores in the United States.

Josh Shabtai, senior director of ecosystem practice at Lowe’s Innovation Labs — Lowe’s tech wing that developed Project Unlock — told Cointelegraph that Project Unlock aims to explore emerging technology to help curb theft while creating better customer experiences.

Recent: What is institutional DeFi, and how can banks benefit?

To accomplish this, Shabtai explained that RFID chips are used to activate specific Lowes’ power tools at the point of purchase. “So if a customer steals a power tool, it won’t work,” he said.

Shabtai noted that RFID chips are a low-cost solution that many retailers use to prevent theft. According to the National Retail Federation’s 2022 Retail Security Survey, 38.6% of retailers already implement or plan to implement RFID systems. However, Shabtai explained that combining RFID systems with a blockchain network can provide retailers with a transparent, tamper-proof record to track in-store purchases. He said:

“Through Project Unlock, a unique ID is registered and assigned to each of our power tools. When that product is purchased, the RFID system activates the power tool for use. At the same time, the transaction can be viewed by anyone, since that information gets recorded to a public blockchain network.”

Mehdi Sarkeshi, lead project manager at Project Unlock, told Cointelegraph that Project Unlock is based on the Ethereum network. Sarkeshi elaborated that each product under Project Unlock is tied to a pre-minted nonfungible token (NFT), or a digital twin, that will receive a status change upon purchase.

“A product’s NFT undergoes a status change when it is either sold by Lowe’s, if it has been stolen, or if the status is unknown. All of this information is publicly visible to customers and resellers since it’s recorded on the Ethereum blockchain. We have essentially built a purchase authenticity provenance for Lowes’ power tools,” he said.

While the concept behind Project Unlock is innovative for a large retailer, David Menard, CEO of asset verification platform Real Items, told Cointelegraph that his firm has been exploring a similar solution. “Traditionally, RFID tags prevent theft, so this problem has already been solved,” he said. Given this, Menard noted that Real Items combines digital identity with physical products to ensure that stolen items can be accounted for. He said:

“If physical items are paired with digital twins, then retailers can know exactly what was stolen, from where and from which product batch. Retailers can understand this with more clarity versus information generated by RFID systems.”

According to Menard, Real Items currently has a memorandum of understanding with SmartLabel, a digital platform that generates QR codes for brands and retailers to provide consumers with detailed product information. He shared that Real Items plans to implement “digital product passports” with SmartLabel products in the future. “We view digital product passports as the foundation for storing information about a product throughout a product’s life cycle,” he said.

Menard further explained that Real Items uses the Polygon network to store product information. It’s important to point out that this model differs from Project Unlock since a blockchain network is only used here to record information about a certain item. “We use a product’s digital twin — also known as its NFT — for engagement. It can be tied to anti-theft, but it’s more about providing retailers with useful data.”

While the solutions being developed by Lowe’s Innovation Labs and Real Items could be a game-changer for retailers, the rise of the metaverse may also help curb retail theft. According to McKinsey’s “Value Creation in the Metaverse” report, by 2030, the metaverse could generate $4 trillion to $5 trillion across consumer and enterprise use cases. The report notes that this includes the retail sector.

Marjorie Hernandez, managing director of LUKSO — a digital lifestyle Web3 platform — told Cointelegraph that designer brands like Prada and Web3 marketplaces like The Dematerialised, where she is also CEO, are already using NFT redemption processes.

Hernandez explained that this allows communities to purchase a digital good in a metaverse-like environment, which can then be redeemed for a physical item in store. She said:

“This redemption process allows retailers to explore new ways to authenticate products on-chain and provide a more sustainable production process with made-to-order demand. This also creates a new and direct access channel between creators and consumers beyond point of sale.”

Hernandez believes that more retailers will explore digital identities for lifestyle goods in the coming year. “This allows brands, designers and users to finally have a transparent solution for many of the problems facing the retail industry today, like counterfeit goods and theft.”

Will retailers adopt blockchain solutions to combat theft?

Although blockchain could help solve in-store theft moving forward, retailers may be hesitant to adopt the technology for several reasons. For instance, blockchain’s association with cryptocurrency may be a pain point for enterprises. Recent events like the collapse of FTX reinforce this. 

Yet, Shabtai remains optimistic, noting that Lowe’s Innovation Labs believes that it’s important to consider new technologies to better understand what is viable. “Through Project Unlock, we have proven that blockchain technology is valuable. We hope this can serve as a proof point for other retailers considering a similar solution,” he remarked. Shabtai added that Lowe’s Innovation Labs plans to evolve its solution beyond power tools moving forward.

Recent: Redeeming physical NFTs: Easier said than done?

While notable, Sarkeshi pointed out that it may be challenging for consumers to understand the value of using blockchain to record transactions. “For instance, if I’m a customer buying a second-hand product, why should I care if it was stolen,” he said. Given this, Sarkeshi believes that a shift in customer mindset must occur for such a solution to be entirely successful. He said:

“It’s a culture building challenge. Some customers will initially not feel good about buying a stolen product, but we need this to resonate across the board. We want customers to know that when a product is stolen, everyone across the supply chain gets hurt. Building that culture may be challenging, but I believe this will happen in the long term.”

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Hong Kong brokers line up for SFC approval ahead of new virtual asset trading legislation

The Legislative Council of Hong Kong passed legislation that will soon open up virtual assets to retail investors, and local financial services are lining up for licensing approval.

Financial services providers in Hong Kong are already taking the first steps to provide services to retail investors, according to local reports. Brokers and fund managers in the region have reportedly asked for advice on licensing requirements ahead of new legislation.

Lawmakers in Hong Kong passed an amendment to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) in December 2022, which aligns with the region’s recent stance on broadening the possibility for crypto trading.

The amendment introduces a new licensing scheme for virtual asset service providers, which will allow retail investors the ability to trade in virtual assets. Currently, virtual asset trading is restricted to professional investors or traders with proof of at least $1 million in bankable assets.

Victory Securities and Interactive Brokers were the first two brokers in Hong Kong with SFC to trade virtual assets for their professional clients.

According to Robert Lui, the digital asset leader at Deloitte Hong Kong, retail investors will most likely be able to trade virtual assets with a large market capitalization and liquidity.

Currently Hong Kong-based brokers do not need specific licence to service clients trading Hong Kong-listed exchange-traded fund futures based on Bitcoin (BTC) and Ether (ETH). Though, those which will provide virtual asset trading will need additional SFC approval. 

The new licensing was initially scheduled for Mar.1 of this year, however the date was then pushed until Jun. 1 in order to give virtual asset service providers more time to accurately prepare. 

Related: Crypto makes history in 2022: Five instances of governments embracing digital assets

This comes after the SFC recently appointed Julia Leung as its new chief executive. Leung started her term on Jan. 1 and is set to be in office for the next three years. She has previously spoken out about tightening local crypto regulations. 

An executive from the Central Bank of Hong Kong also recently said it was looking into investor protection regulations. 

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Celsius amasses 30 potential bidders for its assets, withdrawal motion approved

The bankrupt lender is set to hold auctions for its assets in January, while it's been given the green light to return some customer funds.

Bankrupt crypto lender Celsius Network has attracted 30 potential bidders over its various assets including its retail platform and mining business.

According to a company presentation filed on Dec. 20, more than 125 parties were contacted since September, with 30 potential bidders executing non-disclosure agreements — a legal contract used to protect sensitive information about a company or the bidding terms — typically required during negotiations.

Celsius said that so far, it has received multiple bids proposing a variety of potential transaction and business structures to acquire its assets — such as migrating Celsius customers to the acquirer’s platform along with a haircut of their assets — among other structures.

The lending platform also revealed it had received a number of single asset bids.

With the bidding deadline reached on Dec. 12, the auction for Celsius' various assets is now set for Jan. 10, 2023, after being pushed back from the original date of Dec. 15, according to earlier documents filed by Celsius.

Amended dates for bidding procedures as per Celsius court filings on Dec. 15. Source: Stretto

The latest presentation notes that as of Nov. 25 the company held coins valued at approximately $2.6 billion, but after this is combined with the value of its non-coin assets they are still $1.2 billion short of being able to pay off all debts.

Its ongoing mining operations have been successful however, with Celsius claiming that it has generated positive operating cash flow every month this year as it continues to deploy more mining rigs.

Related: BlockFi files motion to return frozen crypto to wallet users

In related news, on Dec. 20 bankruptcy judge Martin Glenn has just granted a motion previously filed by Celsius on Sep. 1, allowing them to reopen withdrawals for a minority of their customers.

The assets eligible to be withdrawn are those that were only ever held in the Custody Program and for amounts less than $7,575 which were transferred from Earn or Borrow Programs into the Custody program within 90 days of its filing for bankruptcy on Jul. 13.

The order also applies to "ineligible Withhold Assets," with assets included in this definition to be determined following meetings between Celsius, the Withhold Ad Hoc Group and the Celsius Official Committee of Unsecured Creditors.

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say

Nvidia Projects Automotive Industry to Include Metaverse Tech in Its Operations in 2023

Nvidia Projects Automotive Industry to Include Metaverse Tech in Its Operations in 2023Nvidia, a graphics processing unit and artificial intelligence (AI) company, believes that 2023 could mark the start of a metaverse-driven age in the automotive industry. As part of this new conception, automotive companies will start to include metaverse tech and implement it in their industrial and retail operations. Nvidia Believes Metaverse Tech Will Be Part […]

‘Surgical removal’ of crypto will only weaken USD dominance, commentators say