Congresswoman Maxine Waters, Chairwoman of the House Committee on Financial Services, announced that the hearing will take place on Dec. 8.
Titled “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States,” the assembly aims to demystify some of the misconceptions lawmakers have regarding the crypto industry and its underlying technology.
It will be attended by a number of prominent crypto industry leaders, including Circle CEO Jeremy Allaire, who welcomes regulation, Sam Bankman-Fried from FTX, Bitfury boss Brian Brooks, Paxos CEO Chad Cascarilla, Denelle Dixon from the Stellar Development Foundation, and Alesia Haas, CFO at Coinbase.
Coinbase Global CEO, Brian Armstrong, is notably absent as the company was recently embroiled in a regulatory battle over its crypto lending services. There are also no representatives from Tether, the world’s most popular stablecoin, which is also in the crosshairs for policymakers.
Congress has taken a deeper interest in the crypto asset industry as it now cannot be ignored after surpassing $3 trillion market capitalization last month.
On Dec. 2, Chad Cascarilla spoke on CNBC’s “Squawk on the Street” to elaborate on what the hearing may contain. He said that the first angle is how is our financial future going to be different and how this technology is changing lives. He then went on to speak about the national currency:
“Also it is going to be about the dollar, the dollar is changing and the type of product that the dollar represents is shifting. How people use it, what their daily lives look like and why its important for the U.S. to maintain its financial primacy in order to be able to adapt to the changing world.”
Crypto executives will testify before the House Financial Services Committee next week. @PaxosGlobal CEO & witness Chad Cascarilla joined us this morning to discuss the regulation he’d like to see in the space. #Bitcoin $ETH $USDP@CNBC pic.twitter.com/5YQqKkfX7N
— Squawk on the Street (@SquawkStreet) December 2, 2021
Eyes on Stablecoins
Congress has already held several meetings to address the crypto industry. In late November, head of the U.S. Senate Banking Committee Sherrod Brown sent a letter to stablecoin CEOs demanding more information on their issuance and redeeming processes.
Stablecoins have become a growing concern for U.S. regulators since their reserves and backing have yet to be officially audited. In early November, the Treasury Department recommended that stablecoins were subject to “appropriate federal oversight.”
Featured Image Courtesy of SeeNews
At the stage of the 2021 Global ETP Conference, Sohn Byung-doo stated that the digital asset industry is not very different from capital markets. The exec emphasized the need for investor protection and transaction stability support.
The KRX Chief Wants To Study Crypto
So far, Bitcoin and cryptocurrencies remain outside the domestic regulatory scope that covers the traditional financial sector.
On that note, Byung-doo highlighted the growing number of crypto investors in South Korea, estimated to be around 5 million, as well as the rapidly increasing daily trade volume in the country’s crypto market, which is right behind the stock market.
To put things into perspective, the Korean crypto-asset daily market trading volume is around $12 billion, while that of Korea’s composite index, KOSPI, is a little over $16 billion.
While stating that the country needs to study and explore ways to embrace the burgeoning industry, the former regulator also urged for the implementation of proper regulation that will aid in institutionalizing the asset class. Sohn added,
“Now is the time for exchanges to compete directly with overseas exchanges.”
Delay in South Korea’s Crypto Tax
Earlier this week, South Korea’s finance ministry announced its decision to delay plans of taxing cryptocurrency profits for some time. According to an amendment approved by the South Korean National Assembly’s finance committee, the crypto tax law, which was slated to come into action from 1st January 2022, has been pushed for a year.
The initial announcement around taxing crypto profits sparked massive debates and backlash for cryptocurrency investors across the country. It proposed to levy a 20% tax on digital asset gains over the amount of $2,100. As a result, many crypto investors swarmed South Korea’s Cheongwadae or the Blue House website with petitions condemning the tax plan.
There were two major reasons for the outrage. Firstly, such investors were being taxed way more than the stock market players. The latter’s threshold for taxing capital gains stands at around $42,000. Secondly, there is no such regulatory framework with protective measures for cryptocurrency investors as yet. Hence, taxation was deemed unreasonable by many.
More recently, the country’s Financial Services Commission (FSC) called the National Assembly to implement criminal liability to unfair practices such as price manipulation and insider trading in the cryptocurrency market.
Featured Image Courtesy of PulseKoreaNews
According to the British politician who served as Chancellor of the Exchequer from 2016 to 2019 – Philip Hammond – digital assets could ease the post-Brexit financial disruption, which the UK is passing through. If London does not take the cryptocurrency industry seriously, it risks being surpassed by its European competitors, he added.
‘We Need to Move Quickly And Effectively’
In a recent interview with City A.M., the former member of the Conservative Party – Philip Hammond – opined that the UK should move its focus from Brexit to digital currencies. By doing so, the kingdom could secure its financial status since bitcoin, and the altcoins will become more and more employed on a macroeconomic level:
“I personally think the momentum is now unstoppable. We need to move quickly and effectively to secure London’s position.”
Hammond warned that ignoring the asset class is not wise as many European nations have begun embracing them. He added that some of those competitors view cryptocurrencies as an opportunity to overtake the UK as a world financial services hub:
“If we don’t watch carefully we will find some surprising people are ahead of us.”
Speaking of “surprising” countries with a friendly stance on the cryptocurrency industry, the small British Overseas Territory of Gibraltar is worth mentioning.
It has a comprehensive regulatory framework, which has attracted many companies operating in the field. One of the examples is the Chinese crypto giant – Huobi – which recently showed intentions to move its spot-trading operations to Gibraltar.
As for the regulation topic, Hammond regretted that the UK authorities neglected the cryptocurrency sector. He predicted that blockchain technology – the backbone of digital assets – would underpin a future trading system. As such, British watchdogs should take the matter more seriously:
“Regulators have been heavily distracted. We need to move pretty quickly to show that this technology is recognized and accepted by legislators and regulators in the UK.”
Bank of England Is Not a Crypto Fan
The United Kingdom does not seem to provide the friendliest environment for cryptocurrencies since the nation’s central bank – the Bank of England – is a huge critic.
In May this year, Andrew Bailey – the institution’s Governor – argued that bitcoin and the other digital currencies ”have no intrinsic value,” and individuals who invest in them should be extra cautious.
Earlier this month, Jon Cunliffe – Deputy Governor at the Bank of England – reiterated the negative stance saying that the volatility of the market could start to spill over into traditional financial markets.
The President of the Russian Federation – Vladimir Putin – believes bitcoin and the alternative coins bear high risks for investors. However, he predicted that the asset class might play a significant role in the future financial network.
‘The Volatility Is Colossal’
The 69-year-old politician aired his thoughts about the cryptocurrency space during the “Russian Calling” investment forum in Moscow, reported by RBC. According to Putin, private digital assets are highly volatile, which makes them a risky investment instrument:
“It is not backed by anything, the volatility is colossal, so the risks are very high. We also believe that we need to listen to those who talk about those big risks.”
The volatile nature of most cryptocurrencies, including bitcoin, is indeed present. However, the leading digital asset is a relatively new token, and it could overcome its price fluctuations in the upcoming years, especially if authorities impose a comprehensive regulatory framework on it.
Anthony Scaramucci – SkyBridge Capital’s CEO – is a supporter of this thesis. He recently compared BTC to Amazon, reminding that the e-commerce giant was also unstable in its early days but is now one of the most influential companies.
While criticizing cryptocurrencies, though, Putin did not rule out the possibility that they could become part of the future monetary system:
“Although, of course, in some countries, in some economies, cryptocurrencies are being used more and more widely. Maybe this is the future, but we need to closely monitor how this process will develop.”
Not long ago, the southern neighbor of Russia – China – imposed a total ban on cryptocurrency mining and trading. Putin revealed that his country does not intend to go that far. The authorities will follow the developments in the industry and implement “elements of regulation,” which will not harm the nation’s economy:
“As for Russia, we will act on the basis of the realities that are developing in our country. There should be some elements of regulation, but not those that would constrain economic activity.”
Putin’s Previous Stance
This is not the first time when the Russian President has shared his viewpoint on the cryptocurrency universe. In the middle of October, he noted that bitcoin and other digital assets could one day be used as a unit of account and a means of payment.
Asked whether cryptocurrencies could replace the US dollar when settling oil trades, for example, Putin said it “too early to talk about this:”
“In order to transfer funds from one place to another – yes, but to trade, let alone trade in energy resources, in my opinion, is still premature.”
Featured Image Courtesy of Anadolu Agency
CoinDCX – one of the leading cryptocurrency exchanges in India – eyes an initial public offering (IPO) in the near future. The “precise timeline” will depend on the upcoming government regulations.
Following The Steps of Coinbase
Neeraj Khandelwal – Co-Founder of CoinDCX – revealed the news in a recent interview with Bloomberg. He asserted that his company will pursue an initial public offering “as soon as” it receives the green light from the government. According to him, the initiative will strengthen the local cryptocurrency industry and bring more confidence in the markets:
“As soon as the government or the situations allow us, we will try for an IPO. An IPO gives legitimacy to the industry, just like the Coinbase IPO gave a lot of confidence in the crypto markets. Similarly, we want to install a similar level of confidence with an IPO of CoinDCX.”
Speaking of Coinbase, it is worth noting that in April, it became the first major digital asset exchange to have its shares publicly traded. The debut price of its shares started at $381, while at the moment of writing these lines, it is hovering around $300.
CoinDCX intentions come at a critical time since the future of digital assets in India seems somewhat uncertain. Last week, the government announced plans to impose a China-style ban on the industry and thus “prohibit all private cryptocurrencies in India.”
The proposed bill received severe backlash from the community as many locals favor bitcoin and the altcoins. Reuters showed that India has around 15 to 20 million cryptocurrency investors who have allocated nearly $5.4 billion of their wealth in the market. As such, many experts started doubting that the second-most populated country would implement such severe restrictions.
Avinash Shekhar – Chief Executive Officer at Zebpay – predicted that lawmakers are more likely to impose strict rules on digital assets than a total ban. According to Khandelwal, that would be the right decision. It will also indicate “acknowledgment from the government side of the growing investor base for crypto.”
Following in the Footsteps of Others
Aside from Coinbase, another cryptocurrency company that recently became public was Bakkt. ICE’s Bitcoin exchange went in another direction via a merger with a SPAC, and the total valuation was just over $2 billion.
Shortly after, the Bakkt shares skyrocketed by triple-digit percentage following impressive partnerships with Mastercard and Fiserv.
The French financial regulator Autorité des Marchés Financiers (AMF) has reportedly announced that the cryptocurrency exchange – Binance – must guarantee anti-money laundering compliance to set up a regional hub in Paris.
Earlier this month, Changpeng Zhao – CEO of the trading venue – described the French capital as a “natural choice” for positioning headquarters.
Binance Is Not Ready to Settle in France
The largest digital asset exchange – Binance – has been on a mission to find its new home lately. Established as a decentralized platform with “no headquarters and no borders,” it is now changing its structure and looking for a place to settle, as the CEO recently explained. However, the company has some issues with global regulators, which could turn out to be a hurdle in its way.
Currently, France sounds like one of the suitable options where Binance can establish global headquarters since the company has not had any problems with the local watchdogs. Moreover, Changpeng Zhao recently called Paris a “natural choice” for such expansion.
According to a Reuters report, though, settling under the Eiffel Tower would not be such a straightforward move since the local watchdogs insist that Binance has to enhance its AML compliance efforts.
“It’s a sign of the Paris market’s innovative dynamism, but this obviously depends on trust and credibility being guaranteed. That’s what will guide the ACPR and the AMF (financial markets authority) in their actions, especially on the key issue of anti-money laundering,” said Francois Villeroy de Galhau – the Governor of the French central bank.
A few days ago, Zhao told the local press that his company hoped to get a regulatory green light from the AMF in 6 to 12 months. He added that 600 out of 3,500 Binance’s employees are responsible for compliance and relationships with various regulators.
The Partnership with France Fintech
At the beginning of November, the leading cryptocurrency exchange and the non-profit association – France FinTech – joined forces to create a €100 million ($116 million) blockchain project in Europe. It comes by the name of “Objective Moon,” as its primary goal is to support the development of the digital asset industry in France and the rest of Europe.
Back then, Zhao predicted the move could turn France into a top spot in the cryptocurrency space:
“At Binance, we recognize the quality of French and European tech, crypto, and blockchain talent, and we are convinced that with the launch of Binance’s major operations and investment in France, we can significantly contribute toward making France and Europe the leading global player in blockchain and crypto industry.”
How About Ireland?
Ireland is another country that could become the new home of Binance. Earlier this year, the trading venue set up three companies there: Binance (APAC) Holdings, Binance (Services) Holdings, and Binance Technologies.
A few days ago, it established a fourth one, named Binance Exchange (Ie), hinting about a future settlement in the country. Asked whether Ireland falls into such plans, Zhao answered: “Yes, it does.”
The prominent TV personality – Kevin O’Leary – said he would not invest in cryptocurrencies before consulting with regulators first. To him, the space lacks clarity, and watchdogs are the ones to say “what is possible and what isn’t.”
The celebrity investor added he is keen on the following blockchain projects: Solana (SOL), Polygon (MATIC), and Hedera (HBAR), hinting they could “win long term.”
Not Like a ‘Crypto Cowboy’
Kevin O’Leary – also known as Mr. Wonderful as one of the hosts of the TV show Shark Tank – has had a hot and cold relationship with cryptocurrencies over the past years. In 2019, he had a predominantly negative stance on the industry and called bitcoin “worthless.” He went even further by labeling it as “garbage because you can’t get in and out of it in large amounts.”
However, at the beginning of 2021, he started softening his viewpoint and said he is not against the primary cryptocurrency and respects it. Shortly after, he announced his entrance by allocating 3% of his portfolio to BTC.
During a recent interview for CNBC, O’Leary revealed he would invest in digital currencies once again only after discussing the matter with regulators. They can outline “what is possible and what isn’t” in the space and “that’s where the real capital is.” Otherwise, O’Leary would seem like a “crypto cowboy,” and people would look down on him:
“I have no interest in being a crypto cowboy and getting anybody unhappy with me because… I have so many assets in the real world that I’ve invested in already that I have to be compliant.”
The Canadian said he doesn’t see cryptocurrencies “in the same way that other people do.” To him, they are a “software development.” As such, he wanted to make sure which of the digital asset projects would “win long term” so he can invest in them, describing Solana (SOL), Polygon (MATIC), and Hedera (HBAR) as such examples:
“I need to invest in all of those, not just one of them because I don’t know who the winner’s going to be.”
Supporter of USDC
O’Leary also touched upon stablecoins and their merits. He revealed that the Russian digital ruble and the Chinese digital yuan are not attractive financial tools to him since he doesn’t know enough about the blockchain developments in those countries or how they monitor money ownership.
Instead, he backed up USDC – Circle’s stablecoin pegged to the US dollar. The businessman acknowledged that this might sound “counterintuitive” since the current rise of inflation decreases the buying power of the greenback. Nonetheless, according to him, buying USDC could make a potential 6% return.
Sitting on a “large amount of cash” that loses its power because of the financial crisis, O’Leary hinted he would invest up to 5% of that amount in USDC.
Featured Image Courtesy of CNBC
Mike Novogratz is not happy with U.S. President Joe Biden’s decision to pick Jerome Powell to chair the Fed for a second term. And he’s speaking not as a Bitcoiner but as an overall investor: He believes Powell could be detrimental to the markets’ growth.
In an interview for CNBC this week, Novogratz hinted that from his point of view, Jerome Powell had failed to understand the political and economic reality of the United States and that the markets have a similar view, being pessimistic about his tenure.
Careful With Jerome Powell
Speaking about the cryptocurrency market, Mike Novogratz said that “people are getting pretty bearish” on crypto after Jerom Powell’s appointment, especially following the changes in the “macro story.”
“We have inflation showing up, you know, in pretty bad ways in the U.S. So, we can see, is the Fed going to have to move a little faster … That would slow all assets down. It would slow the Nasdaq down. It would slow crypto down if we have to start raising rates much faster than we thought.
The United States is experiencing its highest inflation in 30 years. At 6.2% annually, the consequences are already starting to ripple through the rest of the world, with 39 of the 46 world’s largest economies showing higher inflation year-on-year.
Mike Novogratz argues that now that Powell has the confidence of a new mandate, he can be more aggressive with his policies without needing to measure his actions so as not to put his job at risk. And Jerome Powell’s thinking so far seems to favor an expansionary monetary policy.
Mike Novogratz Remains Focused on the Cryptocurrency Industry
However, Mike Novogratz is a cryptocurrency lover and doesn’t plan to stop being one. As CEO of Galaxy Digital, he has to constantly study market trends and expectations. He assures that the more distant future looks promising for cryptocurrencies after the short-term ups and downs.
The crypto ecosystem is growing, and more and more institutional investors are entering the game, spurring the industry’s growth.
“The amount of institutions Galaxy sees moving into this space is staggering. I was on the phone with one of the biggest sovereign wealth funds in the world today, and they’ve made the decision on a go-forward basis to start putting money into crypto. I’ve had the same conversations with big pension funds in the United States.”
Last month, Novogratz warned that the end of the NFT rush could be approaching and advised investors to take profit and bet on Bitcoin or Ethereum.
As Cryptopotato reported on October 8, Novogratz explained that many NFTs trade for large sums of money primarily because of the emotionality of those involved and expectations – not because of proper fundamentals:
“That’s not normal, in any way, shape, or form … It seems to me like a pretty good time to at least book some profits, and fold it back into Bitcoin or Ethereum or another token.”
Hillary Clinton – former first-lady and US Secretary of State – recently called for the Biden administration to regulate the crypto markets. She said the technology could be “manipulated” by Russia and China, and even “destabilize” the dollar’s status as the world reserve currency.
Crypto Versus America
Clinton re-affirmed her anti-cryptocurrency stance in conversation with MSNBC’s Rachel Maddow on Wednesday. Her comments were part of a larger conversation on regulating tech companies to protect them from foreign influence.
After discussing Google and Apple’s recent compliance with Russian authorities, Clinton pivoted to the issue “on the horizon”, being the crypto market. She showed concern over “even larger sums of money” being amassed by Russia or China through the “control” of certain cryptocurrency chains.
However, she thinks crypto presents a threat that goes beyond nation-states:
“We’re looking at not only states such as China or Russia manipulating technology of all kinds to their advantage. We’re looking at non-state actors – either in concert with states or on their own – destabilizing countries, [and] the dollar as the reserve currency.”
Hillary Clinton famously ran against Donald Trump in the 2016 US presidential election. Despite being pitted as polar opposites, the two happen to agree on this issue. Trump has repeatedly denounced Bitcoin as a “scam” and claimed that it “takes an edge” off the dollar’s global status.
What Do China and Russia Really Think?
Despite Clinton’s theory, China has shown no outward support for any cryptocurrencies besides its digital yuan. The government outright banned all miners from its borders in May, causing it to lose influence over Bitcoin’s hash rate that it formerly dominated.
However, Russia does seem to have adopted a more favorable stance. Last month, the nation’s deputy finance minister stated that they have no intention to follow in China’s hostile footsteps.
Meanwhile, Vladimir Putin has outright recognized crypto as a legitimate means of payment. Particularly, he sees it as a potential future alternative to dollars for purchasing oil. As Clinton suspects, this would indeed weaken the dollar’s strength.
Senator Sherrod Brown appears to be keen on understanding how the process of stablecoin minting and redemption actually work. A comprehensive regulatory regime for stablecoin is the need of the hour, a failure to roll out one will prompt the watchdogs to step in.
The head of the US Senate Banking Committee has called upon stablecoin issuers and platforms to disclose their process. Sen. Sherrod Brown (D-OH), Chair of the Senate Banking, Housing, and Urban Affairs Committee, has sent letters to Coinbase, Gemini, Paxos, TrustToken, Binance.US, and Centre, seeking information on what steps these companies are taking towards consumer and investor protection.
Stablecoin Risks Concerns
For the most part, the United States has been a trendsetter when it comes to embracing new technological advancement and innovation. However, the regulators are yet to apply a similar approach towards cryptocurrencies and specifically stablecoins.
Several high-profile authority figures have highlighted stablecoins as a substantial threat to the global financial system, time and again. But this time, Senator Sherrod Brown is keen on understanding the workings behind stablecoins and the risks they pose.
In his letter to the payment technology company, Circle, the Senator stated,
“I have significant concerns with the non-standardized terms applicable to the redemption of particular stablecoins, how those terms differ from traditional assets, and how those terms may not be consistent across digital asset trading platforms.”
Policymakers’ Escalating Effort on Understanding Stablecoin
He also asked CEO Jeremy Allaire to clarify the essential operational features of the USDC stablecoin. These include the basic purchase, exchange, or minting process, redeeming of USDC, and receiving USD, requirements, or limits (if any), including any minimum redemption size, waiting period, or qualifications.
Questions about USDC issuance and circulation were also mentioned, among others. Brown set December 3 as the last date for the digital asset company to respond.
While emphasizing the rapidly ballooning size of the stablecoin sector, Brown acknowledged the need for better understanding and clarity on how these assets function and their potential risks. The Senator referenced the stablecoin report compiled by the President’s Working Group (PWG), published earlier this month.
The highly anticipated report in question was released by a group of regulators in the US that urged the lawmakers to take subject stablecoin-based companies to similar stringent federal oversight as traditional financial institutions such as banks.