Emerging Markets

Argentina’s Peso Plunges After Central Bank Tightens Foreign Exchange Controls: Citizens Discuss Bitcoin Adoption

18/09/2020 by Idelto Editor

The Argentine peso plunged by more than 10% shortly after the country’s central bank announced measures to tighten controls on the movement of foreign currency. The peso, which is officially pegged at 72 for every USD, touched new lows of 145 to the greenback on the black market. The latest plunge is seen as a further boost to bitcoin and other cryptocurrencies in a country that has been plagued by currency challenges for over a century.

Still, in a statement released on its Spanish language website, the Board of the Central Bank of the Argentine Republic (BCRA) justifies the new measures saying they are an attempt “to promote a more efficient allocation of foreign currency.” Loosely translated, the statement goes on to say:

Federal Administration of Public Revenues (AFIP) has established a “mechanism for the collection of taxes on income and on personal assets at a rate 35% for external asset formation operations (FAE) by individuals as well as on purchases with cards (debit and credit) in foreign currency.

The objectives of the new measures are to “maintain the current quota of $200 per month whilst discouraging the hoarding foreign currency and card expenses.”

Crisis laden Argentina is in its third year of an economic recession partly blamed on the country’s unsustainable external debt levels. BCRA admits that the servicing of these obligations is having an undesired effect on the country’s exchange rate.

Consequently, the new measures also seek to “establish guidelines for a renegotiation of the private external debt compatible with the normal operation of the exchange market.”

However, as previously reported by news.Bitcoin.com, Argentina alongside Venezuela, are two Latin American countries that are seeing their fiat currencies lose value due to excessive printing of money which causes inflation.

Quoting a Chainalysis study, the same report notes that Argentina’s imposition of limits on the amount of U.S. dollars that citizens can buy per month further restricts available options of shielding savings from inflation. According to analysts from the region like Sebastian Villanueva of Chilean crypto exchange, Satoshitango, it is such limits that are helping to spur on the use of cryptocurrencies in the country.

The Chainalysis study already ranks Argentina as the country with the third-highest value of cryptocurrency received between July 2019 and June 2020, just under $3 billion.

Meanwhile, some Argentine citizens reacting to the announcement by BCRA concur with the notion that the latest policy changes will push more towards cryptocurrencies. One citizen who shares this perspective is journalist, Emiliano G. Arnáez. The journalist has previously tweeted how successive Argentinian governments have failed the economy and how bitcoin can be an alternative that his countrymen can use.

In his remarks, Arnáez touts how the main attributes of bitcoin make the digital currency a better alternative to the country’s fiat currency:

“Remember: if you have Bitcoin, they have their own Central Bank. With cryptocurrencies, there are no stocks, with stablecoins, there are no exchange restrictions. They (cryptocurrencies) have a high risk, of course, they do, but the Argentine economy sometimes seems to be riskier and is (repeatedly) hacked by the governments themselves.”

Another Twitter user, Ramiro Marra confirms the immediate impact BCRA’s announcement after tweeting that the “crypto dollar is already at 160. It is going to be a very difficult day.”

The comments by Argentine citizens reaffirm Villanueva’s earlier assertions that “people just want a safe way to store money, and there are no gatekeepers in crypto.”

What do you think about Argentina’s latest currency woes? Tell us your thoughts in the comments section below.

The post Argentina’s Peso Plunges After Central Bank Tightens Foreign Exchange Controls: Citizens Discuss Bitcoin Adoption appeared first on Bitcoin News.

Inflation Hit Ethiopia Demonetizes Currency To Curb Cash Hoarding

17/09/2020 by Idelto Editor

The Ethiopian government has unveiled a new set of banknotes that are expected to help authorities in curbing cash hoarding, illegal trade and illicit financial flows. The move is also aimed at boosting the liquidity of banks that are struggling to cope with Ethiopia’s cash-based economy.

In a statement released via Twitter on September 14, the country’s Prime Minister, Abiy Ahmed Ali announced the unveiling of the “new Birr notes for 10, 50 & 100 denominations, with the introduction of a new Birr 200 note.”

Meanwhile, a report says the government plans to spend about $97 million (3.6 billion Ethiopian Birr) printing the new notes. On the other hand, Ethiopian citizens are expected to replace their old notes within three months.

The Ethiopian government’s decision to demonetize follows persistent calls for such a move by Ethiopia’s Bankers Association. The bankers contend that the $3.05 billion circulating outside the banking system has “exacerbated the liquidity problems commercial banks have faced this year.”

The report also quotes Wasihun Belay, a development economist based in Addis Ababa who acknowledges that while “changing currency is costly and expensive” he still argues that “it is very important to the economy.” The development economist adds that “introducing new denominations is a step in the right direction” and says “500 and 1000 notes” must be introduced as well.

The Ethiopian economy, which been hit by the global pandemic Covid-19, faces increased inflationary pressures after the figure topped 20% in August. This follows increased printing of currency to finance the country’s budget deficit. Both the World Bank and IMF have now downgraded the country’s forecasted annual growth to 3.2% from 7.2%.

Still, Yinager Dessie, governor of the National Bank, is optimistic that the “introduction of the new notes is going to be instrumental in reduce cash-based transactions.” In August, the National Bank introduced cash withdrawal and limits on withdrawals as it moved to influence activity in the informal economy which “has a substantial share in the economy.”

Ethiopia last demonetized its currency at the end of the Ethiopian-Eritrean deadly civil war two decades ago.

What do you think about this move by the Ethiopian government? Share your thoughts in the comments section below.

The post Inflation Hit Ethiopia Demonetizes Currency To Curb Cash Hoarding appeared first on Bitcoin News.

Forex Strapped Nigeria Designates Crypto Assets as Securities

15/09/2020 by Idelto Editor

The Securities and Exchange Commission (SEC) of Nigeria has designated crypto assets as securities as the authorities step up efforts to regulate Africa’s largest cryptocurrency market. The SEC says the classification of crypto assets for regulation is consistent with the country’s investment and securities laws of 2007.

In a statement released Sept. 14, the SEC directs that corporates and individuals “whose activities involve any aspect of blockchain-related and virtual digital asset services, must be registered.”

While the classification is seemingly targeting new crypto assets, the SEC says that “existing digital assets offerings prior to the implementation of the regulatory guidelines will have three (3) months to either submit the initial assessment filing or documents for registration proper, as the case may be.”

Furthermore, foreign issuers of crypto assets are expected to comply with regulations that may require them “to establish a branch office within Nigeria.”

Reacting to the announcement, the General Secretary of the Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), Senator Iyere Ihenyen, commends the regulator for striving to “treat digital assets as alternative investment opportunities.”

Ihenyen says the classification means “investment or security-based digital assets offerings are caught here, whether it is the now dead or dying initial coin offerings (ICOs) that got many fingers burnt in 2017 or the security token offering (STO) that didn’t live up to expectations.”

Still, the SIBAN general secretary feels the SEC “should have clearly defined its test for what constitutes investment or security, rather than vaguely state that virtual crypto assets are securities unless proven otherwise.”

Ihenyen explains why he has reservations about this approach:

“The approach the SEC has taken may be problematic, not only for players and investors in the Nigerian market but also for everyone, including the courts and the regulator itself. More so, the burden of proving otherwise is placed on the issuer, a thing that could be easily abused by regulators and even law enforcement agencies.”

Instead, the SEC should have published a well-defined test for determining what constitutes a security or investment. Ihenyen says doing “this will save us all a lot of time, energy, and resources.”

Meanwhile, Chiagozie Iwu, the CEO of a local cryptocurrency exchange, Naijacrypto, says the SEC’s classification of crypto assets shows some level of recognition for digital assets by the regulator. However, he is quick to point out that the statement does not specifically address the legality or illegality of crypto assets.

The SEC regulations do not say anything about cryptocurrency exchanges and this, according to Iwu, means the SEC has “no classification for crypto exchange businesses yet.” Still, Iwu believes a more comprehensive report will be issued by the regulator shortly.

Meanwhile, Nathaniel Luz, a representative for Dash in Nigeria, says in accordance with the SEC’s classification, cryptocurrencies like “Dash falls under the ‘crypto asset – non-fiat virtual currency’ grouping.” This means this virtual currency cannot be “classified as a commodity or security plus the existence of dash since 2014 pre-dates the ICO days.”

Still, Luz says his organization “is open to working with the regulators should they require any clarifications regarding the classification of dash.”

In the meantime, the SEC’s classification comes at a time when the use of cryptocurrencies for international trade continues to grow in the country. Nigerians also use cryptocurrencies for sending remittances and for online payments. However, Iwu believes the move by the regulator is the culmination of a two-year effort to create a structure for cryptocurrencies. It is unrelated to the current foreign currency crisis.

What do you think of Nigeria’s crypto asset classification? Tell us your thoughts in the comments section below.

The post Forex Strapped Nigeria Designates Crypto Assets as Securities appeared first on Bitcoin News.

Fiat Devaluation Drives Retail Bitcoin Transfers in Africa 56% in a Year: Report

10/09/2020 by Idelto Editor

Fiat Devaluation Drives Retail Bitcoin Transfers in Africa 56% to $316 Million in a Year: Report

Monthly cryptocurrency transfers to and from Africa under $10,000 soared more than 56% from a year ago to reach $316 million in June, according to new research by U.S. crypto analytics firm Chainalysis. Altogether, $8 billion worth of crypto was received into the continent and $8.1 billion sent onchain in the last year.

The total value of retail-sized transfers slowed down somewhat between November 2019 and February 2020 – falling to as low as $147 million – but spiked sharply in the ensuing months, as the hype around Bitcoin’s third halving, which occurred on May 11, started to gather steam.

Chainalysis said the number of small transactions recorded each month climbed 31% to nearly 700,000 by June, with much of the activity concentrated in Nigeria, Africa’s biggest economy and most populous country, along with South Africa and Kenya.

“That relatively small amount of activity [in Africa] is creating life-changing value for users in the region facing economic instability, offering low-fee remittances and an alternative way to save,” observed Chainalysis, in an excerpt of its “2020 Geography of Cryptocurrency Report,” to be released later this September.

The funds are typically moved by individuals and small businesses, it noted. But the biggest drivers of growth inside Africa’s virtual currency economy are remittances and fiat currency devaluation.

Indeed, while some countries are clearing the turf for crypto through soft-touch regulation, others are unwittingly doing the same by failing to contain inflation and maintain liquidity, forcing citizens to take back their financial freedom through alternative currencies, primarily bitcoin (BTC).

For example, the South African rand has lost over 50% of its value against the U.S. dollar in the last decade, Chainalysis stated, “and is consistently one of the most volatile fiat currencies.”

Nigeria, Egypt, Algeria, Ethiopia, and Ghana all face similar issues with their own currencies, it added. In Zimbabwe, government policies have robbed citizens of their savings twice in two decades as the national currency has dramatically shed value.

According to the World Bank, fees for remittances below $200 in Sub-Saharan Africa average 9%, but could be as high 15% in more active economies. The global average is roughly 6.8%. All these factors have driven Africans toward cheaper and trusted alternatives in crypto.

Per the report, around $562 million worth of bitcoin was transferred directly from overseas addresses to ones based in Africa in retail sized payments during the period under review. Chainalysis detailed:

Cryptocurrency can act as a more stable value store for people living under these conditions.

“African users aren’t just using cryptocurrency for overseas transfers between individuals…a significant share of transactions between Africa and other regions — particularly East Asia — are for business purposes,” it added.

In the last year, the continent’s professional market has sent and received more than $210 million worth of crypto, up from about $175 million at the end of July 2019.

In most countries throughout Africa, the virtues of bitcoin are becoming increasingly evident. Whereas alternative currencies are subject to geopolitical considerations and fiscal discipline, BTC investors have little reason to worry about central banks or sanction committees, who are powerless to control a decentralized cryptocurrency.

What do you think about the growing crypto economy in Africa? Share your thoughts in the comments section below.

The post Fiat Devaluation Drives Retail Bitcoin Transfers in Africa 56% in a Year: Report appeared first on Bitcoin News.

Report: Russia Remains a ‘Key Market for Crypto,’ Commands the 3rd Largest Bitcoin Hashrate in the World

27/08/2020 by Idelto Editor

The fervor for cryptocurrency assets in Russia has grown wild over the last few years. This week Xangle Research published a comprehensive report about digital currencies and the Russian environment in 2020. The study’s findings show that Russia is one of the world’s key players when it comes to the crypto economy, but finding reliable information about the subject is “not very easy to find,” researchers stress.

It’s safe to say that Russia is one of the regions in the world where cryptocurrency adoption is booming, but it’s hard to verify the regulatory climate in the area.

A recently published study from Xangle Research explains that the country is a hotbed for crypto in 2020. The research also quotes Binance CEO, Changpeng Zhao (CZ) who has said: “Russia is our key market, one of the most active markets in the global blockchain space.”

The Xangle Research report is a comprehensive look at the crypto economy’s relationship with Russia this year, and the author also highlights that the region is a “key market for crypto.”

Two of the biggest sectors in Russia that currently fuels the crypto environment is mining and trading. Demand for crypto trading is high,” Xangle’s report notes.

“Russia [also] owns the [third] biggest BTC mining power (hashrate) in the world: 6.9% comes from Russia as of April 2020, according to Cbeci.org,” the study highlights.

Additionally, the 2020 crypto report covering the country says a “large portion of the traffic to major crypto exchanges come from Russia.” Xangle’s stats show that Binance captures most of the Russian traffic and the trading platform is followed by Coinbase, Bithumb, and Kraken respectively.

“Crypto derivatives exchanges are also very popular in Russia,” the study reveals, disclosing the two most popular platforms include Bitmex, and Bybit.

Digital currency exchanges that offer ruble fiat on-ramps have some of the highest Russian internet traffic.

Trading platforms such as Binance, Okex, and P2pb2b have RUB as a fiat-on-ramp, and some of the top sources of traffic as well. Despite the large internet traffic, the ruble is “not actively used in trading” as it only represents a market share of “less than 0.3%.”

The Xangle Research report also mentions some of the regulatory climate in Russia concerning digital currencies. The study discusses the recent law that will come into force on January 1, 2021 signed by Vladimir Putin, which gives legal status to cryptocurrency.

Further, the report also mentions how the largest bank in Russia, Sberbank, is considering the creation of a stablecoin.

“We probably may issue a stablecoin on the basis of the law that has been adopted recently. As we can peg this stablecoin to the ruble, this token could become a basis or an instrument for settlements involving other digital financial assets,” Sergey Popov, the director of transaction business at Sberbank told the media this year.

Despite the law’s crypto recognition, Xangle researchers highlight that the cryptocurrency law Putin signed still prohibits the use of crypto as a means of payment in Russia.

Among a number of luminaries, experts, and politicians quoted in Xangle’s 17-page study, the authors also quote Putin’s recent statements.

“The Central Bank of the Russian Federation considers cryptocurrency neither a means of payment nor a store of value,” the Russian President’s statement says at the end of Xangle’s Russian crypto study. “Cryptocurrency is not backed by anything. One should treat it cautiously, carefully,” Putin stressed.

What do you think about the Xangle Research report called “Crypto Asset Market: Russia in 2020?” Let us know what you think in the comments section below.

The post Report: Russia Remains a ‘Key Market for Crypto,’ Commands the 3rd Largest Bitcoin Hashrate in the World appeared first on Bitcoin News.