Crypto Fights for Life as CBDC Interest Raises Questions About Bitcoin
Welcome to the 15th edition of Shrimpy’s weekly newsletter, a place for staying up to date on the latest trends, news, and events in the cryptocurrency industry.
Digital assets evolve and move faster compared to any other market. For those who do not have time to constantly scroll Crypto Twitter, we wrote a special weekly update covering everything major that happened this week.
Summary
El Salvador became the first country to recognize Bitcoin as legal tender
China’s mining crackdown continues as Qinghai becomes the latest province to issue a ban
The IRS will dedicate a portion of its new budget to fighting tax dodgers
India’s parliament will discuss friendlier regulatory frameworks as of next month
Ledger raised $380M in the latest funding round
Binance lost a key employee
Kraken will no longer offer margin trading to all U.S. customers
Hester Peirce stated that self-regulation is good enough for crypto
El Salvador recognizes Bitcoin as legal tender
The parliament of El Salvador has officially recognized Bitcoin as legal tender this week. President Nayib Bukele believes that adopting cryptocurrencies will help its citizens as only 30% have access to financial services. The decision sparked a bullish rally which caused Bitcoin to unexpectedly bounce back to $38,000 after nearly falling below $30,000.
In the meantime, the International Monetary Fund stated that it sees numerous regulatory and economic concerns with El Salvador’s decision to legalize Bitcoin. The organization seeks consultations with the nation’s authorities to investigate the recent development.
Prominent mining province in China imposes crackdown on Bitcoin miners
Qinghai, one of China’s biggest crypto mining provinces, has decided to implement a ban on all virtual currency mining operations. The provincial government recently issued a document announcing the news, following the steps of nearby mining hubs. As a reminder, both Xinjiang and Inner Mongolia have implemented similar restrictions in recent months.
The document mentioned the concerns of China’s central government, particularly in the areas of high energy consumption and environmental pollution. Moreover, financial stability was also noted as one of the key reasons why Qinghai banned crypto mining.
IRS invests $32M in enforcing crypto taxation
The U.S. IRS invested in a $32 million fund created to enforce cryptocurrency taxation. The agency justified its future spending and outlined several main methods as to how it will use the money to boost tax collection activities, one of which includes hiring specialized contractors and cybersecurity experts to build a dashboard for blockchain analytics.
The fund will also be used to hire experts in cybercrime, forensics, consulting services, and investigative support from the private sector to hunt down tax evaders. However, the new budget is yet to be approved.
Indian government changes perspective on crypto regulations
The government of India will loosen its stance towards cryptocurrencies as news sources claim that they will categorize Bitcoin as an asset. The same source mentions that the Securities and Exchange Board of India would regulate the decentralized sector.
According to the anonymous source, the nation’s parliament plans to discuss a new regulatory framework next month. If true, it would coincide with the newly arisen interest of several major crypto exchanges that are lately exploring a potential entrance to their markets.
Ledger raises $380M in a new funding round
Hardware wallet producer Ledger successfully raised $380 million after closing a Series C funding round led by crypto fund 10T Holdings. The round was joined by prominent investors such as Cathay Innovation, Korelya Capital, Wicklow Capital, Dapper Associates, and DCG.
The gigantic funding round sets Ledger at a proposed valuation of $1.5 billion. According to the company, the new funds will be used to accelerate Ledger’s growth by developing more products. This implies that crypto enthusiasts can expect a future lineup of hardware wallets in the coming years.
Binance’s chief finance executive leaves the company
After working for three years, the chief finance officer at Binance Wei Zhou decided to leave the exchange for unknown reasons. The largest crypto exchange by trading volume refused to explain the decision, stating that Wei left for personal reasons.
Zhou previously worked at leading business positions in both the United States and China, carrying 15 years of executive experience. For now, it is unknown whether Binance has already replaced Zhou.
This week in Crypto Regulations
1. Iran to regulate cryptocurrencies ‘ASAP.’ President Hassan Rouhani seeks to implement a regulatory framework that would impose restrictions on cryptocurrencies in order to protect people’s capital while also legalizing digital assets.
Rouhani asked government agencies to partner with the media and cyberspace in order to raise awareness for crypto.
Iranian miners are barred from performing their usual activities until September due to a temporary ban.
2. CFTC Chairman states that DeFi ‘might be’ illegal in the U.S. Unregistered DeFi markets involving derivatives and other complex financial instruments are not legal under U.S. federal laws, stated the Commodity Futures Trading Commission Commissioner Dan Berkovitz.
A FATF report from March has also called for sanctions on the DeFi sector.
Berkovitz is concerned about the fact that consumers do not have the same protections in decentralized finance as they do in TradFi.
3. Denmark’s tax ministry plans to evaluate the nation’s tax laws in order to address cryptocurrencies. The decision was made after the agency discovered that 66% of all transactions are not taxed.
The ministry cites increasing errors in tax filing as another catalyst.
Two years ago, Denmark sent tax evaders letters requesting that they report their crypto activities.
Kraken to stop offering margin trading to certain US investors
A new blog post from Kraken states that the regulatory environment forced them to change their margin trading offering. From now on, the exchange will provide margin trading services exclusively to certain eligible U.S. investors.
Kraken did not expand upon what these requirements are in the blog and instead stated that they would be shared in the near future via email. Moreover, it was noted that clients outside of the U.S. are not affected by the new rules.
SEC Commissioner concerned about suppressing crypto innovation
U.S. SEC Commissioner Hester Peirce warned against suppressing cryptocurrency innovation as regulators began sharing zealous tones. Peirce, a well-known supporter of decentralized technology, stated during an interview for Financial Times that she is concerned about the idea of regulatory agencies to mold crypto into a traditional financial market, implementing the same laws and rules.
The Commissioner believes that self-regulation is an effective way of addressing digital currencies, claiming that it would help cryptocurrencies ‘breathe.’ This represents a stark contrast compared to Commissioner Gary Gensler, who is interested in regulatory scrutiny.
Quote of the week
The Good News
Crypto lending firm BlockFi launched a new platform called BlockFi Primer to tap into liquidity from institutional investors.
A BoE executive director pointed out in a speech this Thursday that stablecoins and CBDCs do not pose a risk to monetary stability.
The head of JPMorgan’s blockchain team commented that the company is interested in programmable money, targeting DeFi as its next venture.
The Bad News
A new report by JPMorgan deems Bitcoin’s futures activity to be a sign of weak demand.
Bitcoin’s impact on global financial markets was mentioned numerous times during a Senate Banking Committee hearing on CBDCs, implying that crypto may fall under pressure as central banks explore digital currencies.
Crypto Twitter Highlights
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