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Cryptocurrency

Fintech CEO: Regulators Finally See Urgency in Commonsense Rulebook for Crypto

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Last month, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency drafted a Joint Statement on Crypto-Asset Policy Sprint Initiative and Next Steps. In its introduction, the paper acknowledged that the “crypto-asset sector presents potential opportunities… for banking organizations, customers, and the overall financial system.” It continued by noting the importance of agencies providing clarity and guidance, particularly to “promote safety and soundness, consumer protection, and compliance with applicable laws and regulations, including anti-money laundering and illicit finance statutes and rules.”

“It’s been a long time coming, but our regulators seem to finally see the urgency in developing a rulebook for the digital assets space. It is interesting, if not particularly remarkable, that they highlight the need is for banking organizations. But the industry, as a whole, has needed standardization for quite some time, including in the area of AML. Even if it took pressure from the banking industry, it will be a welcome change for the industry. It is definitely a win,” said Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.

“We’ve gotten to a point, given that central banks are now racing to release their own digital currencies, that regulators understand they need a more nuanced approach than a simple ban. They can’t ban it. Blockchain is too powerful. They can’t wish it away. Digital assets are here for the long-haul. Now, they’re faced with the task of protecting the general welfare while ensuring that industry can function and take advantage of everything the new innovations offer,” said Gardner. “One thing that most regulators can agree on, even if they’re not saying it, is that they don’t want to cede the power of the blockchain to other countries, particularly their adversaries. This is about more than Bitcoin. This is about the future of the financial system. Countries which attempt to ban, rather than embrace, new technologies will be left behind.”

The statement notes that “[t]hroughout 2022, the agencies plan to provide greater clarity on whether certain activities related to crypto-assets conducted by banking organizations are legally permissible, and expectations for safety and soundness, consumer protection, and compliance with existing laws and regulations related to: [c]rypto-asset safekeeping and traditional custody services [and a]ncillary custody services.

“Functionally, this could be a sign that we’re moving beyond looking primarily at AML and to the industry more generally. Consider the specific mention of custody, a part of the industry which has raised its share of questions. For example, one of the leading providers in the industry has been named in a lawsuit which alleges that they are responsible for the loss of $70 million in digital assets. $70 million in losses is far from buttoned up. I think that regulators are going to have to recognize that custodians have an even greater role in the trading of digital assets as compared to dealing in more traditional assets,” said Gardner.

Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Modulus has provided its exchange solution to some of the industry’s most profitable digital asset exchanges, including a well-known multi-billion-dollar cryptocurrency exchange. Over the past twenty years, the company has built technology for the world’s most notable institutions, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.

“Headlines like that, $70 million in losses, whether due to incompetence or malfeasance, it doesn’t inspire confidence. And this is an industry which deserves the full confidence of mainstream investors. The technology is worthwhile, and, indeed, it is slated to change the way the world interacts with money. In order to get to that point, we must insist on service providers which prioritize safety and security,” opined Gardner.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Cryptocurrency

YouTube To Explore NFT Features For Video Creator

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American online video sharing and social media platform YouTube has announced plans to explore Non-Fungible Token (NFT) features to help video creators capitalize on emerging technologies.

According to YouTube Chief Executive Officer, Susan Wojcicki, the introduction of NFT is to enhance the experiences of creators and fans on the platform, she said, “we’re always focused on expanding the YouTube ecosystem to help creators capitalize on emerging technologies, including things like NFTs while continuing to strengthen and enhance the experiences creators and fans have on YouTube.”

NFT, Non-Fungible Token is a unique unit of digital assets such as art, music, videos, and pictures built on a blockchain network. They can be bought and sold on NFT Marketplace.

Aside from YouTube, other social media platform has begun exploring NFT. Twitter now allows users to post NFTs as profile pictures while Meta, the parent company of Facebook and Instagram, is reportedly working on a similar offering where users can display the tokens they own.

Susan Wojcicki in an annual letter informed content creators that the company is considering web3, internet service and mobile apps rebuilt on decentralized blockchain technology as a “source for inspiration”.

According to the CEO, YouTube is continuously exploring ways to serve its creators by adding tools like fan payments and e-commerce thereby creating more means of income generation.

In her letter, Susan Wojcicki affirmed YouTube’s priorities on gaming, shopping, music, and Shorts. The CEO wrote that Shorts has already generated 5 trillion views since its debut in late 2020. However, YouTube did not provide additional details on when and what NFT features would look like.

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Bitcoin

Stop Using Bitcoin as Legal Tender, IMF Tells El Salvador

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The International Monetary Fund (IMF) has urged El Salvador to drop Bitcoin, the world’s most dominant cryptocurrency, as a legal tender over rising concerns about “financial stability, financial integrity, and consumer protection.”

The Executive Board of the Fund said in a report released on Tuesday after it concluded the Article IV consultation with El Salvador.

The report said “Directors agreed on the importance of boosting financial inclusion and noted that digital means of payment—such as the Chivo e-wallet—could play this role.

“However, they emphasized the need for strict regulation and oversight of the new ecosystem of Chivo and Bitcoin. They stressed that there are large risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities.

“They urged the authorities to narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status. Some Directors also expressed concern over the risks associated with issuing Bitcoin-backed bonds.”

The board, however, said while the COVID-19 pandemic disrupted a decade of growth, “El Salvador is rebounding quickly.” The economy contracted by 7.9% in 2020 and is projected to grow by about 10% in 2021 and 3.2% in 2022, the board said.

“Against this backdrop, public debt vulnerabilities emerged,” the board said. “Persistent fiscal deficits and high debt service are leading to large and increasing financing needs.”

El Salvador became the first country to accept bitcoin as legal tender in 2021 despite the uncertainty surrounding the unregulated coin and the entire crypto space. The government gave $30 in free bitcoins to citizens who signed up for its national digital wallet, known as “Chivo,” or “cool” in English, to deepen its adoption.

However, with Bitcoin and other cryptocurrencies falling with the United States plans to raise interest rates in 2022, the country and citizens that invested in the digital currency could be in trouble.

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Dogecoin

Elon Musk Puts Pressure on McDonald’s to Accept Dogecoin

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Billionaire Elon Musk, the CEO and Cofounder of Tesla, on Tuesday, took to his Twitter page to challenge Mcdonald’s, one of the world’s iconic fast-food restaurants, to accept the popular meme coin, Dogecoin as one of its numerous payment methods across its outlets globally.

The billionaire promised to eat the company’s happy meal on tv if the company accepts the meme coin as payment.

Dogecoin immediately responded to Elon Musk’s tweet with a picture of Mcdonald’s meal containing Kabosu, the dog in the doge meme logo.

This is coming a week after Tesla and Elon Musk announced that the company has started accepting Dogecoin as payment for Tesla’s merchandise. The value of the digital asset surged by 20 percent immediately the billionaire made the announcement via his Twitter handle.

The value of Dogecoin rose by 3.76 percent on Tuesday to $0.1415 a coin, still below its all-time high of $0.7.

Cryptocurrency started falling in early December when it became clear that the US Federal Reserve will raise interest rates in 2022 to curb rising inflation and rein in prices.

According to The Wall Street Journal, the “Federal Reserve officials at their meeting last month eyed a faster timetable for raising interest rates this year, potentially as soon as in March, amid greater discomfort with high inflation.

“Minutes of their Dec. 14-15 meeting, released Wednesday, showed officials believed that rising inflation and a very tight labor market could call for lifting short-term rates “sooner or at a faster pace than participants had earlier anticipated.”

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