Bitcoin fell to USD 80,553, and ether hit a four-month low, as cryptocurrencies led a broad flight from riskier assets, spurred by investor worries over lofty tech valuations and uncertainty over near-term US interest rate cuts.

Cryptocurrencies are often viewed as a barometer of risk appetite, and their slide highlights the market’s “fragile mood.” At the same point in time, high-flying artificial intelligence (AI) stocks are tumbling too, with volatility spiking. Bitcoin went down 12% in the middle week of November, following a stellar run in 2025 that propelled it to a record high above USD 120,000 in October, buoyed by favourable regulatory changes towards the virtual assets globally.

According to analysts, the market remains scarred by a record single-day slump in October that saw more than USD 19 billion of positions liquidated. As it plunged through USD 100,000 in November and closed in on the USD 80,000 level on 21 of the month, some analysts told Reuters that bitcoin was reaching levels that corporate and institutional investors on average paid for their tokens, and where they might have to sell to prevent losses.

“Bitcoin has erased all its year-to-date gains and is now down 12% for 2025, while Ether has lost close to 19%. If it’s telling a story about risk sentiment as a whole, then things could start to get really, really ugly, and that’s the concern now,” Tony Sycamore, a market analyst at IG, said of the fall in bitcoin.

The latest plunge will compound problems for so-called crypto treasury companies, which have been big buyers of bitcoin and other cryptocurrencies so far in 2025. These companies hold the crypto on their balance sheets in the hope that the price rises.

Standard Chartered has estimated that a drop below USD 90,000 for bitcoin could leave half of these companies’ holdings “underwater,” a term which typically refers to holding assets worth less than what was paid for them.

Analysts say the companies could be forced to raise new funds or sell down their crypto holdings, putting further downward pressure on prices.

Listed companies collectively hold 4% of all the bitcoin in circulation, and 3.1% of ether, Standard Chartered estimates.

“The procyclical nature of bitcoin treasury companies is fully obvious now, if it wasn’t obvious six months ago. They buy high, and now some of them are selling low,” Brent Donnelly, president at analytics firm Spectra Markets, said in a note.

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With 24/7 access to real-time transaction data, ranging from traditional securities and wire transfers to digital assets like cryptocurrencies, the ability to monitor and manage limits is not just a back-office function but a core competitive asset. Buying Power Hub offers a transformative approach to limit management, enabling banks, brokers, and other financial institutions to process and approve transactions in real-time.

High complexity is a challenge

The world of banking and finance is fast-moving and complex, and managing customer buying power is a core task. Financial institutions need smart software, specifically a solution that captures every transaction across all trading and payment platforms. It must calculate accurate buying power and push real-time updates to connected systems. The result? Fully synchronised buying power. Instantly.

Smart software, real-time control

Tracking all transactions and synchronising buying power in real-time is only the first step. To stay competitive in the modern financial environment, banks and financial institutions need more, such as intelligent software that provides full visibility and control without delay, without friction, without any compromises. Let’s break down what future-ready buying power management software should deliver.

Monitor every transaction

Efficient buying power management starts with full coverage. Modern software must handle institutional and retail clients within a centralised but logically separated system.

Handle data streams without downtime

Continuous 24/7 trading and payment can’t afford downtime. That’s why rolling upgrades are essential. Instead of traditional version updates with full system restarts, modern platforms roll out new features incrementally.

Synchronise changes instantly

Financial activities and changes must be reflected immediately in all relevant systems. Real-time synchronisation with core banking platforms ensures accuracy and eliminates the lag caused by batch updates.

Customer and counterparty control

A modern system must be flexible. It should allow dynamic limit fine-tuning (automated or manual). For example, transactions typically exceeding limits can be approved under special conditions.

Detect risk factors in real-time

Speed is critical when the buying power is exceeded. The software should immediately flag overdrafts and present them clearly to front-office or risk management teams.

Scale under pressure

High volumes must not lead to system failures. Cloud-native solutions with horizontal scalability ensure that additional computing power can be deployed instantly as traffic spikes.

Ensure seamless integration

Flexibility is key to adoption. The software must work independently of specific systems and support modern interfaces such as Apache Kafka. At the same time, institutions with legacy environments like Websphere MQ or flat-file structures must be able to integrate via adaptors.

Numerous Advantages

Intelligent software enables banks and financial institutions to manage customers’ purchasing power in real-time, across all asset classes from securities to cryptocurrencies. Financial institutions have full control over their counterparty limits, which are updated in real-time across all asset classes traded on various systems.

By integrating cross-system transaction monitoring, real-time synchronisation, and flexible limit management, institutions can streamline processes, minimise risk, and approve transactions instantly. Cloud-native, platform-independent architectures with rolling upgrades ensure continuous availability, scalability, and compatibility with modern and legacy systems.

When banks rely on modern software solutions, they quickly reap many benefits—for example, real-time updating, risk minimisation and fraud prevention, efficient data processing, and dynamic limit adjustment. Centralised limit control management will also be a relief for risk and compliance management, since they have fewer systems to monitor at the same time, but a consolidated view across clients and counterparties.

In view of increasing regulatory requirements and growing complexity in trading, banks should therefore quickly implement solutions that make existing processes more efficient.

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According to Chainalysis’s annual report, this is not an exact amount and will likely increase over time as new details about past crimes emerge, potentially reaching USD 51 billion.

It is also important to note that this estimate excludes funds from non-crypto-native crimes such as drug sales and money laundering. The 2023 figure was USD 46.01 billion, so if Chainalysis’s projections are accurate, there will be a substantial increase in raw numbers, even though the figure has decreased significantly in percentage terms.

The ratio of crime volume to industry volume was 0.61% in 2023. However, after several spot ETFs were approved in 2024, many large institutions and wealthy investors entered the market, increasing overall volume and reducing the ratio to just 0.14%. Finally, it appears that hackers are shifting their focus from Bitcoin to stablecoins.

Although there are tens of thousands of different cryptocurrencies, most threat actors still demand payment in Bitcoin when a ransomware attack (or something similar) occurs. Four years ago, Bitcoin accounted for about 70% of all illegal transactions; in 2024, that number dropped to 20%.

Stablecoins, a type of cryptocurrency whose value is based on fiat money rather than fluctuating sharply like that of regular cryptocurrency, entered the market at the same time and now hold about 63%.

In 10% of cases, Monero was used, according to Chainalysis. A well-known cryptocurrency with a focus on privacy, Monero is also mined by the notorious cryptojacker XMRig.

Meanwhile, US President Donald Trump boosted the market value of each cryptocurrency by announcing on social media the names of five digital assets he plans to include in a new US strategic reserve.

According to a post on Truth Social, an executive order from Trump in January 2025 will establish a stockpile of various cryptocurrencies, including Bitcoin, Ether, XRP, Solana, and Cardano. The specific names of the currencies have not yet been disclosed.

The post Illicit crypto volume hit a record USD 40 billion in 2024 appeared first on International Finance.

While some meme coins come with a market value (which also makes them convertible currencies that can be used in real-world transactions), most of them don’t often have utility, such as being used to pay blockchain participants for doing work for the blockchain. For example, ether is used to pay validators for verifying transactions on the Ethereum blockchain.

When discussing meme coins, the first name that often comes to mind is Dogecoin (DOGE), which has a market cap of USD 14.42 billion as of September 2024. However, other notable coins include SHIB, PEPE, WIF, BONK, and FLOKI. In today’s episode of “Start-up of the Week,” International Finance will feature a venture called Neverless. This company aims to simplify the process for aspiring investors to start trading cryptocurrency, with a particular emphasis on providing access to small-cap tokens.

Knowing The Start-Up In Detail

The crypto startup was founded by three former executives at British fintech giant Revolut in 2022. One of the founders, Phuc To, was Revolut’s global head of product, and was in charge of the company’s crypto project back in 2021. His colleague Mikael Peydayesh was the head of core payments at Revolut, and later became the head of premium plans, and another co-founder Arthur Johanet was the head of card payments for a while before he went on to lead Revolut’s cryptocurrency department.

While crypto exchanges have greatly simplified the onboarding experience for new users over the years, the trio believed it could still be improved, so they teamed up to create a new app with one vision: making cryptocurrencies more accessible. Neverless lets crypto investors buy over 400 crypto tokens from the start-up’s app using Apple Pay or Google Pay. In addition to the most common cryptocurrencies, the start-up has chosen to offer access to meme coins and relatively rare coins with low trading volumes.

Buying these small-cap tokens can be challenging, as the investors usually need to find a crypto exchange that lists them. Alternatively, they can swap tokens on a decentralised exchange, which can be complicated if the investors don’t understand how decentralised applications (dApps) work. When it comes to people buying tokens with low trading volumes, they can face things like varied pricing from one trading venue to another, apart from having a large spread between the buying and selling prices. Neverless claims it can seamlessly route trades to the right trading platform to get its users the best prices.

On some cryptocurrencies (BTC, ETH, DOGE, SOL, XRP, and AVAX), Neverless generates interest that is passed on to the users. The company also offers automated trading strategies that revolve around high-frequency arbitrage and market-making. Neverless can take a share of the returns generated from these yield-generating products.

The company has secured a MiFID (Markets in Financial Instruments Directive) license, which means that it is a regulated financial firm in Europe. It will have to comply with the Markets in Crypto-Assets (MiCA) regulation when it comes into force in the coming days. Earlier in 2024, the start-up raised USD 6.7 million in a seed round led by Lakestar and Connect Ventures.

As of December 2024, Neverless has transformed itself as an institutional-grade platform to grow the crypto investors’ capital, with the latter getting the opportunities to buy meme coins, trade 500-plus cryptos for free, apart from earning automatically up to 7.78% AER (Annual Equivalent Rate) on savings, investing like hedge funds in 11.16% AER Strategies and zero-fee trading, which results in crypto investors earning higher returns on their assets (six times higher than the highest easy-access rate of banks).

Here Are The Products

In terms of facilitating crypto trading, Neverless allows investors to open their online accounts in less than two minutes, from where they can buy their meme coins through Apple or Google Pay, while not hurting their purses on things like deposits or excess fees.

If these same people are buying coins from other platforms, they immediately start at a loss of up to 1.49%, due to odds not being in their favour. However, Neverless assures profits for crypto traders as by spending USD 1000, they get 0.01074 BTC in return, higher than what established exchanges like Binance and Coinbase are offering now. The traders automatically earn 3.04% annual interest on Bitcoin with Neverless, with no lock-up period.

Next is Neverless’ “Strategies Account,” which the start-up dubs as a crypto investor’s pocket hedge fund. By investing in the fund, one will get a return of 11.17% AER (Annual Equivalent Rate that shows what the interest rate would be if interest was paid and compounded annually). Returns through the “Strategies Account” make investors’ long-term earnings exponential.

Unlike traditional hedge funds, “Strategies Account” gives people options to invest in crypto as little as they like, without worrying about locking in their funds for long periods. Generally, hedge funds involve investments based on “prediction,” while trying to forecast market movements, highs and lows. However, predictions often don’t come true, resulting in those investments failing.

Neverless Strategies differentiates itself from traditional hedge funds by helping investors to make money in real-time with real data. The start-up’s algorithm scans the live markets for inefficiencies and profits from them. It detects small price differences of the same asset in different venues, or quotes to both buyers and sellers at different prices. All the trades take place in nanoseconds, while ensuring consistent returns at lower risks, irrespective of the market movements.

Giving Paramount Importance To Data Safety

While most of the 21st century businesses are relying on AI-powered bots to answer customer queries, Neverless has put its money on “Human Intelligence,” when it comes to answering things in a transparent and crystal-clear manner, especially making investors understand that “No Return is Risk-Free.” To back things up, the start-up has even installed an in-app risk dashboard, updated in real-time.

The venture’s core team comes from a bank (Revolut) that looked after 40 million-plus customers and more than 17 billion euro in assets. All of Neverless’s solutions are designed and operated as per the industry-leading security protocols like biometrics and multi-factor authentication. Passcodes never get stored in plain text and irreversibly hashed using a competition-winning algorithm so that no one can read or decrypt them, not even Neverless staffers.

Registered as a Virtual Asset Service Provider in multiple European Union countries, Neverless only works with the world’s best financial crime technology firms.

“Data are encrypted at rest using AES-256 and in transit using TLS 1.2 or greater. We leverage Google Cloud for the physical security of our servers. Our staff is thoroughly vetted and regularly trained on data protection. Minimum access is given on a need-to-know basis and frequently reviewed,” the start-up noted.

The post Start-up of the Week: Neverless is here to make meme coins easy to buy appeared first on International Finance.

Over two years later, however, Russia’s banking industry is not only surviving but also thriving. Reports show an unexpected surge in net profits, defying predictions of an economic collapse. This feature explores the sanctions imposed, the operational hurdles faced, the ways Russian banks have adapted, and what lies ahead in light of recent geopolitical developments.

Financial strangulation or inconvenience?

The sanctions were multifaceted, with several escalations over the past two years. Perhaps the most significant measure was cutting several major Russian banks from the SWIFT international payments network. This effectively isolated Russia from global financial transactions, making it challenging for banks to execute cross-border payments.

The SWIFT ban meant that Russian banks could not easily communicate with foreign institutions, severely restricting their ability to engage in international trade and payments. This was a severe blow, particularly for a country like Russia, which heavily depends on exports of oil, gas, and other commodities to finance its economy.

Sanctions also included freezing the foreign assets of major Russian banks, such as VTB Bank, Sberbank, and Gazprombank, and also prohibiting these institutions from transacting in dollars, euros, and other major currencies. By freezing assets, Western nations sought to deny these banks access to liquidity critical to their international operations. The transaction bans also meant that Russian banks were effectively barred from participating in the global financial system, making international business dealings extremely cumbersome.

The sanctions also targeted high-level executives, CEOs, and board members of these banks, freezing their assets abroad and restricting travel. Such moves aimed to apply personal pressure to decision-makers within the banking industry, effectively putting a face to the consequences of Russia’s geopolitical actions. The sanctions have not only impacted the finances of these executives but also added a psychological component to the economic warfare, further incentivising key stakeholders to change their behaviour.

Over the past two years, these sanctions have continued to evolve, with Western nations adding further layers. The aim was to close any loopholes that Russian financial institutions could exploit. Additional sanctions targeted secondary players, cryptocurrency transactions, and correspondent banking services that helped Russian banks indirectly access international systems. The new restrictions were also extended to subsidiaries and affiliates in third countries, tightening the noose around the Russian banking sector and forcing them to reassess their international strategies.

Challenges faced by Russian banks

The sanctions have certainly not been without consequences for Russia’s financial institutions. Among the most critical challenges faced by Russian banks were the inability to access foreign capital markets, currency shortages, and severed ties to Western institutions. These challenges forced Russian banks to find new ways to maintain their operations and services for both domestic and international customers.

Banks struggled with liquidity crises due to restricted access to foreign currency. Given that a large portion of Russia’s financial reserves was held abroad, the freezing of these assets led to immediate concerns about the ability to manage balance sheets. Moreover, the exclusion from SWIFT severely impacted the ease of international payments, forcing Russian banks to look for alternatives to conduct cross-border trade and facilitate remittances. The sudden loss of liquidity threatened the ability of Russian banks to fulfil their obligations, leading to fears of insolvency.

The sanctions also caused significant issues in terms of technological isolation. Many Russian banks had relied on Western software and technologies to run their operations smoothly, and sanctions meant that updates and support for these technologies were no longer available. As a result, Russian banks had to accelerate the development of domestic alternatives, often with mixed results. This increased operational costs and presented security vulnerabilities, adding another difficulty for the banking sector.

Yet despite these considerable hurdles, Russian banks were quick to pivot and discover ingenious adaptation methods. By leveraging state support and establishing alternative financial mechanisms, they managed to maintain functionality and even thrive under pressure.

How Russian banks found workarounds

The resilience of the Russian banking sector can largely be attributed to a combination of government support, market adaptability, and strategic partnerships. Anticipating the risk of being cut off from SWIFT, Russia developed its own domestic payment system, SPFS (System for Transfer of Financial Messages). Though it lacks the reach of SWIFT, SPFS has ensured the continuity of domestic transactions and has even expanded to work with foreign entities in countries like China, India, and Iran. SPFS’s adoption has grown steadily, with numerous financial institutions from partner countries joining the network, allowing Russia to maintain a channel for international payments, albeit with added delays and higher costs than SWIFT.

Russia also advanced its Mir payment card system, positioning it as an alternative to Visa and Mastercard, both of which had suspended operations in Russia. The acceptance of Mir cards has expanded, particularly in countries with close ties to Russia, such as Turkey and Belarus, reducing dependency on Western financial infrastructure.

Mir cards have also become essential for domestic consumers, facilitating transactions in an environment where international payment systems are no longer reliable. The government has incentivised the use of Mir cards, integrating them into salary disbursement for public sector employees and pensions, thereby ensuring mass adoption.

The Kremlin made significant moves towards a de-dollarisation strategy, increasing the use of the Russian ruble and the Chinese yuan in international trade. Partnering with countries willing to bypass the dollar system, Russian banks leveraged these partnerships to maintain trade flows and stabilise the ruble.

Bilateral trade agreements with China and India have helped to replace dollar-denominated transactions with rubles and yuan, insulating Russia from currency-related vulnerabilities. These new trade channels have also helped stabilise the Russian economy, allowing it to maintain essential imports and exports without relying on Western financial institutions.

The Russian government further stepped in by providing state-backed loans and liquidity support to key banks. These efforts helped cushion the immediate impact of sanctions, allowing banks to restructure and avoid insolvency. Interest rate adjustments by the Russian central bank also played a role in stabilising the domestic financial environment.

The central bank’s decision to raise interest rates sharply following the initial wave of sanctions helped curb capital flight and stabilise the ruble, although it made borrowing more expensive. Subsequently, rate cuts were used to stimulate the economy and support domestic lending, showing the flexibility of Russian monetary policy in responding to crisis conditions.

Russian banks have also increasingly leaned towards cryptocurrencies and are piloting the digital ruble. This pivot has provided alternative channels for transactions, bypassing the traditional and heavily sanctioned banking infrastructure. Also cryptocurrencies, despite their volatility, have become a crucial tool for facilitating international transactions and evading sanctions. Meanwhile, the digital ruble, currently in its testing phase, aims to provide a stable, government-backed digital currency that can be used both domestically and internationally, further diversifying Russia’s financial tools in the face of Western sanctions.

Finally, partnerships with countries like China, India, Turkey, and UAE have provided critical support. Russian banks have utilised correspondent banking relationships in non-Western financial centres to facilitate international payments, allowing trade and finance to continue albeit at a higher cost. By establishing and strengthening these regional alliances, Russia has managed to circumvent many of the financial barriers imposed by Western sanctions. These partnerships have not only provided much-needed financial channels but have also helped foster a bloc of nations with a shared interest in resisting Western dominance in the global financial system.

In response to technological isolation, Russian banks have invested in emerging technologies, such as blockchain, to create secure channels for international financial transactions. Blockchain technology has enabled Russia to develop a decentralised mechanism that bypasses traditional international banking systems. This has reduced the reliance on Western technologies and allowed for a more resilient payment infrastructure.

Furthermore, partnerships with non-Western tech companies have also facilitated the development of banking software tailored to circumvent Western sanctions. Russian banks are increasingly collaborating with Chinese and Indian technology firms to enhance their capabilities, allowing them to maintain functionality similar to pre-sanction operations.

Are sanctions effective?

Chris Weafer, Chief Executive of Macro Advisory, notes that the Russian banking sector has demonstrated remarkable adaptability.

He said, “The sanctions have certainly hurt the Russian economy, but the notion that they would quickly cripple the banking sector and force political concessions was over-optimistic. Russia’s ability to adapt—through alternative financial networks and domestic ingenuity—shows a capacity to endure despite the isolation.”

Another perspective comes from Elina Ribakova, Deputy Chief Economist at the Institute of International Finance, who believes that the impact of the sanctions is blunted by Russia’s strong fiscal policies and partnerships with non-Western countries.

“Russia has built financial bridges to partners like China and India, which has kept their economic engine running. It is also clear that domestic banking support from the government has cushioned the blows, allowing for short-term profitability,” she noted.

Indeed, the net profit figures for the Russian banking sector tell a surprising story. As of October 2024, the sector posted a 4% increase in net profit, despite an overall economic slowdown. Analysts attribute these figures to the government’s interventionist policies, capital controls that limited cash outflows, and high interest rates which benefited profit margins on loans. The Russian central bank’s proactive measures to stabilise the ruble and manage inflation also played a crucial role.

Yet, there are dissenting voices. Mark Galeotti, an expert on Russian politics, points out that the profitability of Russian banks may be deceptive.

“What we see are banks that are generating profit on paper, largely because of state subsidies and artificial financial mechanisms. In reality, the sector is not as healthy as it looks, especially given the mounting non-performing loans and restricted access to technology that impacts long-term growth,” he added.

Non-performing loans have indeed been on the rise, as many businesses struggle to stay afloat amid a stagnant economy and the challenges of isolation from the West. This has led to concerns about the sustainability of the banking sector’s profitability. Moreover, the reliance on government support raises questions about how these banks will perform if and when this support is scaled back.

The sanctions have undoubtedly isolated Russia from major financial markets, curbed its access to capital, and put tremendous pressure on its economy. The Russian middle class, international businesses, and many sectors of the economy have been severely affected, leading to capital flight, unemployment, and economic contraction. The standard of living for many Russians has declined, with rising inflation and decreased purchasing power affecting everyday life.

However, when it comes to the financial sector, the story is more complex. The Russian banking sector’s adaptability has blunted the intended effects of sanctions. Non-Western alliances, state support, and structural adjustments have given Russian banks a lifeline that the West perhaps underestimated. Moreover, with oil and gas revenues still flowing in—albeit redirected—the Kremlin has had the funds necessary to prop up its banking system. These revenues have allowed Russia to maintain its fiscal policies and support the broader economy, thereby reducing the pressure on the banking sector.

There is also the aspect of sanctions fatigue. As the war drags on, some Western nations face economic pressures, leading to hesitations about further tightening sanctions. Additionally, loopholes in enforcement have allowed Russia to continue leveraging cryptocurrencies and informal networks for financial transactions. The effectiveness of sanctions is thus undermined not only by Russia’s adaptability but also by the challenges of maintaining a united front in the West as economic conditions worsen globally.

The Trump factor

The effectiveness and future of these sanctions are even more uncertain with the changing political climate in the United States. The recent return of Donald Trump to the presidency raises significant questions about the direction of US foreign policy concerning Russia. During his previous term, Trump took a less confrontational stance towards Moscow, often expressing a desire to improve relations.

While it remains to be seen how the new administration will navigate the ongoing war and sanctions regime, analysts suggest that Trump may be more inclined towards negotiation rather than escalation. This shift could mean a softening of sanctions or at least less emphasis on expanding them, particularly if Trump seeks rapprochement with Russia to focus on countering China’s economic rise. Trump’s approach might involve revisiting the terms of existing sanctions and potentially lifting some in exchange for concessions from Moscow, which could provide much-needed relief for the Russian banking sector.

According to Dmitri Trenin, a senior fellow at the Carnegie Endowment for International Peace, “Trump’s presidency might bring a recalibration of the US’s approach to Russia. If Washington opts for dialogue over confrontation, we could see sanctions being dialled back or loopholes being allowed to ease tensions.”

This change, however, could lead to tensions with Europe, which has so far been united in sanctioning Russia under US leadership. If the US softens its stance, European allies may find it increasingly challenging to maintain a tough position without American support, especially as European economies also struggle with high energy prices and inflation. The potential divergence in transatlantic policies could create gaps that Russia might exploit, further undermining the effectiveness of the current sanctions regime.

As the world watches the political landscape shift, particularly with a change of leadership in the United States, the direction that sanctions—and ultimately the Russian banking sector—will take is a question that remains open.

The only certainty is that the next chapter will be shaped by a complex interplay of politics, economics, and international alliances. The Russian banking sector’s fate, much like the broader geopolitical scene, is far from settled, and the coming years will be crucial in determining whether the adaptations made thus far will be enough to secure long-term resilience or merely a reprieve in an ongoing economic battle.

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The total value of the cryptocurrency market has nearly doubled this year, reaching a record high of just under USD 3.8 trillion, according to data provider CoinGecko. For context, Apple alone is valued at about USD 3.7 trillion.

Bitcoin’s journey from the libertarian fringe to mainstream acceptance on Wall Street has created millionaires, introduced a new asset class, and popularised the idea of “decentralised finance” during a volatile and often controversial 16-year history.

Bitcoin has more than doubled in value this year and has risen over 50% in the four weeks since Donald Trump’s significant election victory, which also resulted in the election of several pro-crypto lawmakers to Congress.

After surpassing USD 100,000 early Thursday morning in Asia, Bitcoin quickly climbed above USD 103,000 on its way to an all-time high of USD 103,619, marking a surge of approximately 6% for the day. Its latest value was USD 101,933.

During an interaction with Zawya, Mike Novogratz, founder and CEO of US crypto firm Galaxy Digital, said, “We’re witnessing a paradigm shift. Bitcoin and the entire digital asset ecosystem are on the brink of entering the financial mainstream – this momentum is fuelled by institutional adoption, advancements in tokenisation and payments, and a clearer regulatory path.”

During the election campaign, Donald Trump spoke in favour of digital assets and vowed to make the US “crypto capital of the planet”.

Joe McCann, CEO and founder of Asymmetric, a Miami digital assets hedge fund, said, “We were trading basically sideways for about seven months, then immediately after November 5, US investors resumed buying hand-over-fist.”

A couple of days back, Donald Trump claimed that he would nominate Paul Atkins to run the Securities and Exchange Commission.

Atkins, a former SEC commissioner, has actively participated in crypto policy as the co-chair of the Token Alliance, an initiative aimed at developing best practices for digital asset issuances and trading platforms. He is also involved with the Chamber of Digital Commerce.

Blockchain Association CEO Kristin Smith said, “Atkins will offer a new perspective, anchored by a deep understanding of the digital asset ecosystem. We look forward to working with him…and ushering in – together – a new wave of American crypto innovation.”

Several crypto companies, including Ripple, Kraken, and Circle, are competing for a position on the crypto advisory council that Trump has promised to establish.

The post Bitcoin surges Past USD 100,000 for the first time appeared first on International Finance.

The statements brought digital currency to the fore in a presidential race where the two front-runners (including Democrat and the current Vice-President Kamala Harris) attempt to set themselves apart on contentious themes. The political focus coincides with a boom in the value of Bitcoin, the most popular cryptocurrency, which has increased by 60% this year.

Donald Trump, who opposed cryptocurrencies when he was the president (from 2016 to 2020), has started a blitzkrieg push to promote digital assets. Kamala Harris, the presumed Democratic contender, has not said anything about the matter yet.

Senior scholar in economic research at the Brookings Institute Aaron Klein told ABC News, “This is a truly live problem,” citing important demographics like young voters who trade cryptocurrencies disproportionately.

A Game-Changing Bill And Musk Warning

Donald Trump has promised a “Strategic National Bitcoin Reserve” in his second term, apart from predicting the currency potentially eclipsing gold’s USD 16 trillion market capitalisation. Meanwhile, Senator Cynthia Lummis has introduced a bill to direct the United States Treasury to purchase 1 million bitcoins worth almost USD 70 billion—while MicroStrategy’s Michael Saylor has upped his huge bitcoin price prediction.

“If I am elected, it will be the policy of my administration, United States of America, to keep 100% of all the bitcoin the US government currently holds or acquires into the future, we’ll keep 100%. This will serve, in effect, as the core of the strategic national Bitcoin stockpile,” Trump said during his speech at Bitcoin 2024.

Wild rumours had swirled in the leadup to the event that the Republican could announce about creating a US bitcoin strategic reserve, with analysts comparing it to both the US’s gold and oil reserves. And to some extent, Trump has lived up to the expectations.

The United States currently holds around 212,000 seized bitcoins, worth some USD 15 billion, compared to its USD 600 billion worth of gold reserves.

“Soon [bitcoin] will be surpassing the entire market cap of silver. It’s not bad about gold. How about gold? Let’s go gold. One day it probably will overtake gold, but based on the way it’s going now, it could very well be a possibility,” Trump said further.

After Donald Trump’s speech, pro-bitcoin and crypto Republican Lummis unveiled her bill.

“We know from modelling the numbers and past experience with Bitcoin, that it is capable of being an absolute game changer for the mess the United States has gotten itself into with its debt and its deficits,” Lummis told The Block in an interview ahead of the announcement.

“We have a strategic oil reserve. We hold gold. So the idea of a strategic reserve used specifically to reduce the debt solves so many problems that it almost seems inherently obvious, but it’s nevertheless a big step,” the Senator added further.

Ahead of Trump’s speech and Lummis introducing her bill, Michael Saylor, the founder of software company-turned-bitcoin buyer MicroStrategy, predicted the bitcoin price could surge to USD 49 million per bitcoin by 2045, which would mean bitcoin’s total market capitalisation would be almost USD 100 trillion.

Donald Trump wants to see the United States reclaim its position as the world leader in industry, innovation, and technology, as the Bitcoin conference showed.

That encompasses cryptocurrency and other industries, senior Republican Brian Hughes said in a statement to ABC News, while adding, “Kamala Harris and the Democrats are attacking tech innovators and others in the field, putting needless burdens and barriers in the path of our country’s future generation of business leaders.”

Charting Trump’s And Harris’ Positions On Crypto

In his first term, Trump harshly attacked cryptocurrency, calling it “extremely volatile and built on thin air” and even commenting, “Unregulated Crypto Assets can facilitate illicit activities, including drug trade.”

However, Trump 2.0, if it happens, will see the Republican course correcting himself. He has already pledged to loosen cryptocurrency regulations and create the first National Strategic Bitcoin Reserve.

Additionally, Trump declared that he would “fire” Gary Gensler, the chair of the Securities and Exchange Commission (SEC), whom many cryptocurrency supporters detest for his strict regulatory policies.

Donald Trump added that he would like to see expanded bitcoin mining by American firms, even though he called cryptocurrency a ”scam” in 2021.

Digital asset proponents say that cryptocurrency users are becoming a growing political force as the Presidential election nears. Some crypto advocates are backing Trump, and any move by the US to create a national bitcoin reserve would likely be seen by them as a major move to legitimise cryptocurrency.

Meanwhile, crypto executives are upset with the SEC’s enforcement actions under the incumbent President Joe Biden. The agency has alleged that several crypto companies facilitate the trading of digital assets on their platform that should have been registered as securities, which the firms deny.

A group of nearly 30 Democratic lawmakers and Congressional candidates sent a letter to the Democratic National Committee and Kamala Harris in July 2024, urging them to take a ”forward-looking” approach to digital assets.

Several well-known Silicon Valley heavyweights have endorsed Trump in recent weeks, including Tesla CEO Elon Musk, who is well-known for his support of cryptocurrencies. Cameron and Tyler Winklevoss, two millionaire cryptocurrency entrepreneurs who rose to notoriety in the early 2000s after suing Facebook CEO Mark Zuckerberg, are among the other backers of Trump.

On the other hand, experts believe it’s still difficult to determine Harris’ precise stance on cryptocurrencies. They pointed out that the federal trial of FTX creator Sam Bankman-Fried and the regulations Gensler implemented regarding cryptocurrencies have led to a general perception that the Biden administration is strict on cryptocurrencies.

As per Aron Klein of the Brookings Institute, Democrats have differing opinions on crypto policy. Senator Elizabeth Warren, a Democrat from Massachusetts, has been a vocal opponent of cryptocurrencies, for example, and tech billionaire and Kamala Harris backer Mark Cuban has advocated for a more accommodating approach to digital assets, as Klein pointed out.

Experts speculated that Harris would eventually try to moderate the Biden administration’s stance on cryptocurrencies. As to the Financial Times report, the Harris campaign has reached out to leading cryptocurrency companies with the aim of “resetting” the relationship between the industry and the Democratic Party.

Exchanges have reportedly taken place with representatives from Coinbase, Circle, and Ripple Labs, three heavyweights in the sector. The goal is to ease the tensions born from the perceived hostile positions of the Biden administration.

Kamala Harris’ advisors insist that this openness is not primarily aimed at attracting campaign funding. Instead, it is about laying the foundations for a constructive relationship, to develop a balanced regulatory framework for the sector.

Donald Trump’s course correction is already benefiting the Republican campaign, as the pro-crypto super PAC Fairshake has raised more than USD 200 million from leading investors. The Trump campaign itself has received about USD 3 million in crypto donations since it announced that it accepts this type of contribution.

The Harris campaign seeks to counter this by promoting a vision of “responsible capitalism,” as it hopes to reassure the crypto industry about the party’s intentions.

However, as per the reports, Kamala Harris is considering anti-crypto Michigan Senator Gary Peters as her running mate for the upcoming polls. Peters supported the Money Laundering Act of 2023 which talked about the use of crypto in illicit terror financing.

Crypto industry veterans have warned Harris about the anti-crypto stand initiated by Democrats. Galaxy Digital chairperson Mike Novogratz has advised Harris to beware of Senator Warren who has been constantly attacking the industry with regulations. Similarly, XRP lawyer John Deaton, who’s fighting the next elections against Warren, said that Kamala Harris should fire SEC Chair Gary Gensler.

Klein told ABC News, “I think Harris’s campaign will have some degree of strategic ambiguity between the Biden administration’s policy and what the Bitcoin sector wants.”

The Future

The United States is not the first country to keep Bitcoin in its national reserve. El Salvador had done it four years ago but unfortunately for them, their acquisition was a mere prelude to a market crash.

The United States acquiring such massive stockpiles of Bitcoin might make the cryptocurrency more stable and immune to high volatility. Or it could bring the world’s largest economy crashing down. Only time will tell.

Donald Trump has already made his mind clear on the sector’s future in his second Presidential term (if that happens). And the stance has benefited the Republicans, in terms of acquiring election donations. Kamala Harris, on the other hand, wants to correct her party’s relationship with the virtual currency players as well. However, her stance on the matter has been muted till now. And if Senator Gary Peters emerges as her running mate, the industry may not take it positively.

One thing for sure is that the crypto industry has somehow emerged as a political force in 2024. Even though there are other big economic issues than the virtual currency, based on which Americans will cast their votes, when it comes to acquiring campaign donations, both Republicans and Democrats will love to have the crypto players on their side.

The post IF Insights: Crypto’s fate hinges on US electoral outcome appeared first on International Finance.

There is also a lot of anticipation for the altcoin season when scores of other coins are expected to peak in value. Many revolutionary technologies in the decentralised currency, apps, and finance protocol ecosystems that are in development could radically alter the way we interact with each other.

Blockchain and subsequent technologies have been at their core working towards decentralisation and moving power away from behemoth financial institutions like central banks and toward common folks such as ourselves worldwide. The promise has always been an escape from a government-controlled environment to more democratic, peer-to-peer-regulated systems.

This hope of freedom remains strong in the cryptocurrency movement. However, there is pushback from governments around the world that aim to use blockchain technology to consolidate even more power by developing digital currencies (Central Bank Digital Currencies, or CBDC) issued by their respective central banks.

Blockchain is a double-edged sword that you can use to either decentralise and democratise or centralise and wield unlimited power, just as you can harness atomic energy to power megacities and annihilate human civilisations.

What is CBDC?

CBDCs are central bank-issued digital currencies that complement cash rather than replace it. In a CBDC world, the wallet holder can easily transfer each virtual currency unit’s digital code to other people’s digital wallets.

These digital currencies, unlike “traditional cryptocurrencies,” are not decentralised; central banks issue them instead of independent entities like Bitcoin. Theoretically, the value of CBDCs would be as stable as the fiat currency of the country issuing them, unlike other crypto assets that can experience significant fluctuations.

Furthermore, different countries are testing a variety of CBDC strategies. The Eastern Caribbean is implementing DCash, an account-based concept that is one kind of CBDC. Customers maintain direct deposit accounts with the central bank through DCash.

China’s e-CNY, a CBDC pilot programme, is at the other extreme of the spectrum. It is up to private-sector banks to provide and manage digital currency accounts for their clients. In 2022, China will present e-CNY at the Beijing Olympic Games. The money was usable for purchases made within the Olympic Village by athletes and visitors.

The European Central Bank is also considering a different model, in which authorised financial institutions run individual permissions nodes on the blockchain network to facilitate the issuance of virtual euros. To preserve user privacy, the last model, well-liked by “cryptophiles” but not thoroughly tested by central banks, distributes fiat currency, government-issued money unbacked by a commodity, as anonymous fungible tokens.

Some 87 countries, or more than 90% of the world’s GDP, are exploring the possibility of CBDCs. Let’s take a deeper look:

Launched in June 2022, the JAM-DEX from Jamaica is the first officially recognised CBDC as a legal tender. There are no sophisticated use cases (such as cross-border payment for smart contracts) and the offering is somewhat basic. Unlike the Bahamas’ Sand Dollar and the Eastern Caribbean Central Bank’s DCash, Jam-Dex is not based on blockchain technology.

Nigeria introduced eNaira in October 2021, becoming the first nation in Africa to implement a CBDC.

Africa’s Sub-Saharan region is about to embrace CBDCs. The extensive adoption of the mobile money transfer service M-PESA has created a robust financial and social framework for the possible future application of CBDCs.

The central banks of Saudi Arabia and the United Arab Emirates collaborated to create Project Aber. This project explored the use of a jointly issued digital currency as a tool for domestic and international payments between the two nations.

Why are governments pursuing CBDCs?

Some proponents of blockchain technology believe that new digital instruments, like CBDCs, may solve problems with efficiency, security, and accessibility that plague the current physical infrastructure and alternate cryptocurrency assets. Money is expensive to print and some cryptocurrencies, such as Ethereum, have exorbitant gas fees (transaction fees) that aren’t viable for day-to-day transactions. CBDC enthusiasts (mostly big tech and banks) believe centralised digital currencies are the answer.

Among the frequently cited benefits are:

Lower Operational Costs: Financial service providers can potentially reduce their yearly direct costs by $400 billion by allocating funds toward digital banking instead of physical infrastructure. However, we must weigh the lower costs against the substantial new technology investments that CBDCs would require.

Faster Transactions: The electronic payment systems in many nations could operate more quickly and effectively thanks to CBDCs. As we’ll see below, this argument is becoming less persuasive.

Improved Accessibility: The percentage of US adults without bank accounts is less than 5%, whereas the global unbanked population was 1.6 billion in 2016. Mobile-accessible CBDCs have the potential to improve financial inclusion. Additionally, mobile money gives digital financial service companies access to untapped areas. But adoption isn’t a given; a lot of underbanked individuals could prefer the complete secrecy that cash provides.

Increased Safety: Implementing a regulated digital currency accessible through mobile devices may improve payment security and lower the likelihood of fraud by guaranteeing a complete and irreversible transaction, even in the absence of a formal bank account. Users may be able to “sign” transactions digitally through the controlled use of private-key cryptography. This would boost the confidence of all stakeholders and expedite the transaction’s completion.

Interoperability: For those who are unaware, some argue that blockchain interoperability holds the key to resolving the disjointed and compartmentalised characteristics of blockchains. Without external intervention, blockchains cannot communicate with one another because they are trustless systems. Cross-chain solutions can be helpful. Cross-chain solutions facilitate the smooth transfer of data between blockchains. Users of defi protocols and dApps practically need to interact with cross-chain solutions, as many of the most significant and fascinating projects currently exist outside of platforms like the Ethereum L1 blockchain.

Currently, blockchain interoperability is fragmented and incompatible. Many rival interoperability efforts compete with one another to become the most successful, resulting in customised cross-chain products with differing levels of security and reputation that ultimately serve only to manipulate the blockchain environment. One of the biggest ironies of blockchain technology is that various cross-chain solutions are still incompatible with one another. Even worse, this incompatibility makes it more difficult for consumers, businesses, and authorities to evaluate the security of each choice, endangering the general acceptance of blockchain technology.

According to some, a common interoperability framework is the answer.

One project cannot be responsible for ensuring blockchain compatibility. There must be an industry-wide initiative. We need to come together and establish once and for all how we want to send, receive, and verify data from another blockchain rather than taking an “everyone for himself” approach.

Adopting a common framework for interoperability might jeopardise the viability of the economic models behind ongoing interoperability projects. Instead, it would merely serve as the framework for an extremely secure layer of basic infrastructure, atop which individual projects might construct products that incorporate various trade-offs specifically designed for certain use cases. This distinction is what matters.

CBDC utilisation and development

Many nations’ central banks have started research projects and pilot programmes to ascertain if a CBDC would be useful and viable in their respective economies.

The first nation to enact a CBDC was the Bahamas. It intended to improve financial inclusion for its 700 island-dwelling citizens, some of whom have restricted access to ATMs and banking services, so it introduced the Sand Dollar in 2020.

As of March 2024, the Bahamas, Jamaica, and Nigeria were the three nations with operational CBDCs. For technical reasons, the Eastern Caribbean Currency Union suspended its CBDC and launched a new trial programme.

Nineteen of the G20 have programmes under development, while 36 CBDC pilots are now in operation. A CBDC is being considered by the BRICS nations: Brazil, Russia, India, China, and South Africa.

The United Kingdom’s Britcoin, which was in existence from 2011 to 2019, is one instance of a CBDC endeavour that was unsuccessful.

The United States is one of the nations investigating whether a CBDC “might improve on an existing safe and efficient U.S. domestic payments system,” according to the Federal Reserve.

When it comes to the authoritarian use of technology, China is always ahead. It has outlawed private cryptocurrencies, but the nation has experimented with virtual money. The Central Bank of China (PBOC) has developed the most sophisticated market application of CBDC to date. Private-sector banks are required to distribute and manage these accounts for their clients under China’s CBDC e-CNY pilot programme.

In late 2019, PBOC began testing e-CNY for use in consumer lifestyle applications such as shopping, transit, government services, and wallet-based payments. After starting in four cities, the pilot programme swiftly spread to five more. By May 2022, the e-CNY pilot had processed 260 million transactions totalling over 83 billion yuan through 4.5 million merchant wallets.

Proponents claim China’s CBDC experiment revealed the following possible advantages. To use e-CNY, you do not need to have a bank account. Six approved state-owned banks offer digital wallets that customers without an account can download and use. CBDC, like blockchain-based cryptocurrencies, allows users to authenticate themselves with banks using personal digital fingerprints. By doing this, banks avoid doing business with unreliable parties, which may prevent them from becoming involved in fraud and other illegal actions like money laundering.

Banks may save money using CBDC to reduce transaction reporting and monitoring costs. At the same point of time, it could be feasible for e-CNY to simplify the allocation of subsidies, like employee transportation.

However, it is important to see how China’s social credit system and CBDC go hand in hand to have absolute control over the populace. With CBDC, the government can monitor each individual’s transactions in real-time, and it can even control spending limits and what one can buy with their money. Because of this, CBDCs are a source of fear for many in the tech and economic circles.

Battle for the soul

We are witnessing an epic struggle for the very spirit of the financial system, even though the fighting is mainly silent and hidden from the public eye. Central banks are considering replacing the bank-issued digital currency that consumers use daily with publicly issued digital currency. This could significantly alter and weaken the financial system’s stability.

Fear of losing in a growing arms race often drives government decisions. If another central bank introduces a more appealing form of exchange, no one wants to deal with falling demand for their currency or soaring withdrawals from their financial institutions. However, the rush to get ready for the economic equivalent of military mobilisation could create a highly unstable international order that undermines monetary authority.

The digital currency of central banks (CBDC) might be in several formats. Some versions might be harmless, but the most extreme, one that is widely accessible, elastically supplied, and interest-bearing, can cause unsettling changes in the financial system, erode the availability of credit, and jeopardise privacy.

The financial system that exists now is the result of several factors that came together over the last century. First, authorities obstruct the issuance of private paper money by combining harsh taxes with outright prohibitions. Governments grant licences to private intermediaries, typically commercial banks, so long as the liabilities issued by the latter are convertible into liabilities of the central bank on an equal footing. Last but not least, the private sector manages the retail payments system for the rest of us, while the central bank oversees the wholesale payments system for banks.

All of this indicates that almost everything that people consider to be money in our day and age is a commercial bank’s digital liability. For instance, demand and time deposits, which are digital entries on bank ledgers, make up 97% of the overall amount of M3, or 144% of GDP, in the United Kingdom, where the total quantity of M3 is 148% of GDP. In the euro region, 91% of M3 is digital. Furthermore, in China, 96% of broad money, which accounts for over 200% of GDP, is digital.

Most people are unaware of this, as Bank of England Deputy Governor Jon Cunliffe pointed out in a recent lecture. When they buy groceries, buy a new phone, or renew a software subscription, they are unaware that their bank is creating digital money for them. Crucially, we can depend on this system because the central bank provides the necessary framework.

Authorities genuinely pledge to turn specific bank liabilities into the means of exchange, the liquid, safe asset known as reserves, under as many different global conditions as they can to accomplish this. Experience tells us that under most global conditions, central banks dedicated to price stability are better able to accomplish this than private entities. We depend on this framework, in Cunliffe’s words, to “tether private money to the public money issued by the state.”

Central banks are moving forward, frequently citing goals like monetary policy execution, financial inclusion, and payment efficiency. Two more significant drivers are visible. First, there is a desire to stop the issuance of private monetary instruments like Libra (now Diem) and replace cryptocurrencies like Bitcoin. Governments, on the other hand, have extensive experience with these private currencies and can either apply harsh taxes or outright bans when they come to light. The second is FOMO or fear of missing out. Central bankers want to ensure that they can issue CBDC as soon as others do. This, in our opinion, leads to instability, since, theoretically, a sudden and unexpected incident can prompt several central banks to quickly mobilise their digital currencies to avoid falling behind.

This brings up some important information concerning CBDC. Before releasing retail digital currency, a central bank must decide on several design elements. Is this an instrument for anonymous bearers? Will a person’s holdings be subject to quantity restrictions? Is it only available to citizens of the issuing jurisdiction to hold? Will it also have 0% interest, like paper money?

We are aware of the solutions to these queries regarding paper money. It is an anonymous-bearer instrument. The supply is elastic enough to permit, in most cases, the limitless conversion of certain bank obligations at par into the medium of exchange. Everyone has the option of using paper money. It also has no interest.

The CBDC’s likely characteristics are also readily apparent. CBDC must maintain its anonymity to avoid promoting illicit activities. For CBDC to truly serve as a substitute for paper money, its distribution must be flexible. People may store an infinite amount; lacking such an opportunity, bank obligations may not convert into CBDC on an equal basis. Limiting citizens’ possessions is an example of capital controls that are foolish and unworkable. Lastly, we observe two justifications for CBDC’s need for interest. First, we believe that a central bank paying interest on commercial banks’ reserve deposits but not on individual deposits is politically untenable. Second, in its absence, authorities would be unable to reduce nominal interest rates below the effective lower bound.

Four major issues arise from inventing such a “universal” CBDC: disintermediation, currency replacement, lack of privacy, and the impossibility of guaranteeing compliance. On the first hand, financial strains would eventually force uninsured deposits to leave private banks for the central bank, even though inertia (along with interest rate rises and service enhancements) would keep money in the banking system for a while. Furthermore, these inflows will come from highly reputable central banks, based in rather stable political and financial environments. Imagine what would happen if the Fed gave universal, unlimited accounts, given the current high overseas demand for US paper money. The implications might be disastrous for emerging markets and developing economies.

Privacy and compliance are the last two linked difficulties that arise from CBDC’s non-anonymity. Everything we do on the first day becomes traceable. Although we do not support free banking or libertarianism, we do agree that there are significant risks associated with giving governments access to this kind of in-depth data on our daily activities. It is therefore difficult to understand why democratic nations would consent to such a concentration of power.

Moving on to compliance, someone will need to put in the effort to make sure CBDC users follow the law. These KYC and anti-money laundering initiatives are expensive. Nowadays, we outsource these responsibilities to commercial banks. In addition, banks offer a wide range of other services. Who will pay the price, and who will carry out this task?

The establishment of an intermediated CBDC is one method of addressing privacy and compliance concerns. Under this arrangement, banks or brokers manage individual accounts, protect customer privacy, oversee compliance, and aggregate balances into central bank accounts (which are likely to generate interest). Despite this strategy, the dangers of currency substitution or domestic disintermediation remain. Even so, money would continue to enter the central bank indirectly, through what are essentially narrow banks.

In light of this, it is easy to understand why the People’s Bank of China is developing a digital renminbi before other central banks. Even during a financial crisis, there is little chance of disintermediation because most of the big banks are state-owned. Strict capital controls currently impose significant restrictions on currency inflows. Expectations of personal privacy are already low. Last but not least, state-owned banks can readily finance access if the government so chooses.

Returning to the original query: In what areas is the current monetary system deficient? We respond that, independent of new digital currencies from central banks or private issuers, there is a great deal of room to enhance the payment system and increase financial accessibility.

Both the public and private sectors are already making efforts to offer retail payment systems that are more affordable, quicker, more dependable, and easier to use both domestically and internationally. The TIPS system, for instance, costs €0.002 per transaction and has a processing time of 10 seconds in the euro region. Furthermore, the US Federal Reserve plans to introduce FedNow in 2023; the UK has faster payments; and Canada is trying real-time rail (RTR). None of these initiatives advocate for CBDC.

In terms of financial accessibility, India’s example is useful. Launched in 2014, the Pradhan Mantri Jan Dhan Yojana (PMJDY) uses the nation’s universal biometric personal identity to save expenses and offer free basic bank accounts. Account balances average almost $50 for the approximately 420 million users brought into the system. Once more, subsidies were necessary for India’s success—not the issuance of CBDC.

All of this makes us worried. To be clear, we are ardent supporters of technologies that raise welfare and save costs. However, the most significant innovations, those that enhance credit availability and payment infrastructure, do not necessitate ubiquitous CBDC and its associated dangers. Why, then, are central banks working so hard to get ready? Why would someone make such a plan for contingencies?

We don’t see any simple ways to stop this unfavourable result. The cooperative equilibrium in which no one introduces CBDC is difficult to enforce, much like in a traditional prisoner’s dilemma. First, central banks cannot promise that they will never issue CBDC. Second, others now believe it is too late to oppose China’s move toward the CBDC; even though they are fully aware of the dangers, they feel obliged to prepare.

The best chance may be in the central banks, all moving extremely cautiously and working to “get the design right.” That, in our opinion, entails going considerably beyond universally available, elastically supplied, interest-bearing CBDC.

Taking everything into consideration, we conclude that issuing universally accessible, elastically supplied, interest-bearing CBDC is a foolish move on the part of central banks. On a domestic level, it might displace private middlemen by enticing authorities to direct credit through direct deposit inflows into the central bank. An elaborate collateral and haircut system would be required, which would significantly increase officials’ power over credit distribution even if the central bank were to re-circulate the funds to potential lenders through an auction process.

Worldwide, there might be a tidal wave of money moving from areas seen as less stable to those seen as safe, which would increase inequality and the power of the wealthy receivers. And lastly, privacy. Although this issue might be solvable, the fact that CBDC grants access to all of our activities would undoubtedly entice totalitarian regimes.

For now, Federal Reserve Chair Jerome Powell’s words are of some reassurance: “We would not want a world in which the government sees, in real-time, every money transfer that anyone makes with a CBDC.”

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Bitcoin has historically sparked market cycles with strong jumps, but the real action usually happens when the market is consolidating and other cryptocurrencies are leading the way. Several variables promoting wider use and raising the value of digital currencies are expected to make this pattern more noticeable.

The possibilities of an altcoin rally, which has the potential to change the dynamics of the cryptocurrency market drastically, are mostly due to the integration of decentralised financing (DeFi), improvements in blockchain scalability, and the growing application of smart contracts.

As per TradingView data, the aggregate market capitalisation of altcoins is presently over USD 1.16 trillion, indicating a 15% surge in the last two weeks. This increase is getting close to the resistance levels seen in mid-March when the market capitalisation exceeded USD 1.2 trillion.

Indicators To Watch Out For

Market observers are closely monitoring several significant signs that may signal the start of cryptocurrency’s rise.

The first is the 20-day exponential moving average (EMA), which highlights recent price movements and is essential for predicting future rallies. A bullish crossover in the EMA20 of the entire crypto market capitalisation indicates that a rally may be on the horizon.

The stochastic RSI, which evaluates the relative strength indicator’s (RSI) strength and weakness over a predetermined period, is another important indicator. This metric’s bullish crossing implies that altcoins may be preparing for notable price swings.

The anonymous cryptocurrency trader Titan of Crypto claims that a “rally time” may occur if the total market capitalisation of all cryptocurrencies “retests” the EMA20 and simultaneously “crosses bullish” on the stochastic RSI.

Additionally, the market share of Bitcoin, which is based on its dominance, provides details about investors’ attitudes and risk tolerance in general.

Based on past trends, alternate seasons typically exhibit a particular pattern of liquidity movement. Before it reaches the market, it usually goes through multiple stages.

A robust bull market fuels Bitcoin’s expansion during this period, which could see the cryptocurrency reach new all-time highs. At the same time, the popularity of Bitcoin starts to decline, suggesting a possible move toward altcoins.

Ethereum’s Turn: When Bitcoin corrects, Ethereum frequently takes the lead and shows remarkable gains. The upward trend in Ethereum might align with a period of consolidation in Bitcoin.

Big-Cap Altcoins Shine: During this stage, money and investor focus go to well-known altcoins, which causes a notable price increase.

Mid- and Low-Cap Frenzy: Mid- and low-cap cryptocurrencies with strong growth potential experience tremendous growth and more volatility at this stage.

At present, Bitcoin holds a 52.92% dominance. A drop in this number can indicate a change in investor sentiment about cryptocurrencies and could herald the arrival of an alt season.

This coincides with the overall altcoin market cap, which does not include the top ten cryptocurrencies, falling 17.55% to USD 266.47 billion in the last 30 days, according to TradingView statistics.

Trader Rekt Capital pointed out that even with the fall, the market is still above the USD 250 billion support level, indicating that it is preparing for a future upswing.

According to Van de Poppe’s study, the recent approval of the Ethereum ETF may catalyse for all seasons, in line with the market’s past trends. Ethereum’s growth and the confidence of investors may cause the altcoin market as a whole to appreciate more broadly.

He dug deep into his research to reevaluate the significance of retail confidence, which usually comes back when altcoins begin to gain traction, especially when Ethereum exhibits resilience.

One possible spark for an altcoin season is the approval of the Ethereum ETF. However, because of the listing procedure, it can take months for the full effect to manifest.

Developments in regulation have had a favourable impact on attitude in addition to market dynamics. The Fit21 law has had bipartisan support, and Trump’s embrace of cryptocurrency donations has improved the prospects for the market. Furthermore, Ethereum’s possible classification as a commodity is another development in regulation that is favourable.

And talking about Trump and cryptocurrency, the Republican presidential candidate now wants all remaining Bitcoin to be made in the United States. And the news comes at a time when the virtual currency industry is increasing its lobbying efforts in the American political circle as it faces heightened scrutiny from regulators, especially since bankruptcies at major crypto firms (with FTX being the prominent name) in 2022 spooked investors, exposed fraud and misconduct, and left millions of investors out of pocket.

Expert Forecasts And Market Attitudes

Divergent views exist among experts about the possibility of an alt season; some analysts believe the largest alt season might start and eventually achieve a USD 4 trillion market capitalisation.

Some analysts, like Benjamin Cowen, have pointed out that the state of the market right now does not point to the impending all-season, indicating that Bitcoin might continue to rule the markets for a little longer.

The Altcoin Season Index by Blockchain Centre, which identifies an altseason when 75% of the top 50 coins beat Bitcoin over the previous 90 days, reflects this opinion.

Merely 41% of the top 50 altcoins have outperformed Bitcoin in the past ninety days, according to the index. Given the optimistic outlook, the index’s reading of less than 75 indicates that cryptocurrency season has not yet officially begun, offering a more circumspect viewpoint.

Although there are encouraging indications of a forthcoming all-season, the nature of the cryptocurrency industry is still unclear.

Investors should continue to exercise caution and keep up with any changes or trends in the market. When constructing investment positions, it is essential to conduct in-depth research and analysis on cryptocurrency projects to optimise possible profits and efficiently mitigate risks.

Before the alt season picks up full steam, it can go through a consolidation phase. Numerous other cryptocurrencies, including XRP, Litecoin, Solana, and many more, are waiting in line to try their luck after the ETH ETF. The market appears to be more optimistic than ever about ETF adoption.

The post IF Insights: Is cryptocurrency market going to witness potential Altcoin season? appeared first on International Finance.

According to the Argentine media, President Javier Milei will be preparing to issue an emergency decree to create a framework that would regulate the operation of these, putting it under the oversight of the national securities watchdog (CNV).

Argentina was placed on the FATF grey list from 2010 to 2014 due to its lax money laundering policies. The upcoming visit of the financial watchdog to assess the country’s money laundering countermeasure may be behind the latest government measure.

Under the new decree, all cryptocurrency service providers will have to register with the national cryptocurrency watchdog and operate under a license that will be provided by the authority even if these digital currency players are not based in the Latin American country.

Also, these ventures will have to provide information to the national intelligence unit to comply with anti-money laundering laws, forcing cryptocurrency services lenders to produce risk reports and report suspicious movements.

“Implementing such measures could lead to consolidation in the crypto environment, given that large cryptocurrency providers in the country would be able to comply with these requirements from day one. Small exchanges and peer-to-peer (P2P) markets could be forced to withdraw due to their inability to comply,” reported Bitcoin.com on the matter.

The executive order will likely come before March 2024, coinciding with the FATF visit to Argentina. Milei, known for his liberal stance and support for Bitcoin, introduced a bill translated as “Law of Foundations and Initial Measures for Argentinian Liberty” earlier in 2024. While the proposed legislation aims to alleviate taxes across various industrial sectors, it omits any provisions regarding cryptocurrencies, thereby effectively eliminating their tax declaration.

Earlier, crypto owners had the privilege of declaring their holdings, benefiting from a favourable fixed tax rate (no tax for holdings below USD 100,000 and a 15% tax for those exceeding this amount).

Critics stated that the bill pushed by Milei contradicted his “support for cryptocurrencies,” while labelling the tax policy as unfairly biased. Minister Guillermo Francis, however, pointed to a lack of consensus among political factions as the reason behind this controversial decision.

Should the proposed legislation pass, holding cryptocurrencies in Argentina will not incur taxes, said accountant Marcos Zocaro, while interacting with the CCN.Com.

“Tax obligations will arise only from capital gains generated through sales, and that too below a specific threshold. In the case of an individual, for the simple act of buying what the law calls digital currency, no tax is paid. What is taxed on profits, is the profit made from the sale and there is also a minimum below which no tax is to be paid,” the expert stated further.

As per the crypto industry insiders, international transfers of digital currencies will be subject to a tax rate ranging from 5 to 15%, a strategy designed to attract foreign investments.

The bill also proposes a provision for the declaration of cryptocurrencies without necessitating evidence of their origin.

Diana Mondino, the Argentine Minister of Foreign Affairs, stated that cryptocurrencies would continue to play a role in Argentina’s financial landscape, while following certain frameworks.

Cryptocurrencies in Argentina are known to be a potential bulwark against inflation, helping to safeguard individual earnings. Businesses also get the opportunity to have streamlined international transactions through digital currency.

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