Category: News

By Jonathan Stempel

NEW YORK (Reuters) – U.S. prosecutors in Manhattan on Wednesday charged a former product manager at OpenSea, the largest online marketplace for non-fungible tokens, with insider trading, the first such case involving digital assets.

Nathaniel Chastain, 31, of Manhattan, was accused of secretly buying 45 NFTs on 11 separate occasions based on confidential information that the tokens, or others by the same creator, would soon be featured on OpenSea’s home page.

Prosecutors said Chastain chose which NFTs to feature, and sold his NFTs shortly after they were featured, typically for two to five times what he paid.

In one instance, Chastain allegedly more than quadrupled his money by purchasing the NFT “Spectrum of a Ramenfication Theory” on Sept. 14, 2021, and selling it early the next morning.

Prosecutors said the scheme ran from June to September 2021, with Chastain transacting through anonymous digital currency wallets and accounts at OpenSea, also known as Ozone Networks Inc.

Chastain pleaded not guilty on Wednesday to wire fraud and money laundering charges, each carrying a maximum 20-year prison term, before U.S. Magistrate Judge Barbara Moses in Manhattan.

Bond was set at $100,000. Chastain’s lawyer did not immediately respond to requests for comment.

“NFTs might be new, but this type of criminal scheme is not,” U.S. Attorney Damian Williams in Manhattan said in a statement. “Today’s charges demonstrate the commitment of this office to stamping out insider trading – whether it occurs on the stock market or the blockchain.”

Non-fungible tokens are unique digital assets, reflecting ownership of files such as artwork, other images, videos and text, and recorded on a blockchain.

The NFT market totaled about $40 billion in 2021, and more than $37 billion from January to April 2022 though transaction activity has been stabilizing, according to the blockchain data firm Chainalysis Inc.

“When we learned of Nate’s behavior, we initiated an investigation and ultimately asked him to leave the company,” OpenSea said in a statement about Chastain. “His behavior was in violation of our employee policies and in direct conflict with our core values and principles.”

(Reporting by Jonathan Stempel in New York; Additional reporting by Luc Cohen in New York; Editing by Richard Chang, Bernard Orr)

By Howard Schneider

NEW YORK (Reuters) – The development of digital currency and payments technologies could change how the Federal Reserve conducts monetary policy and the composition of its balance sheet, issues the central bank will need to work to understand, New York Fed President John Williams said Wednesday.

“Digital transformation could have implications for markets and for our interactions with counterparties, as well as how we carry out monetary policy,” Williams said in opening remarks to a research conference at Columbia University.

“The big question is what a world of digital currencies like stablecoins and (central bank digital currencies) would mean for the implementation of monetary policy. How will central banks anticipate and adapt?” Williams said.

The role of central banks “will always be to supply money and liquidity to bring stability to the economy and financial system,” he said. But “it’s critical that we understand how these transformations could affect the economy and the financial system, as well as monetary policy implementation.”

The Fed is debating whether to create its own version of a digital currency, and the administration of President Joe Biden is undertaking a broader discussion about the regulation of cryptocurrencies and related technologies like stablecoins.

Regardless of whether the Fed creates a digital dollar, the development of a network of private currencies, the growth in size of stablecoin and crypto markets, and the expansion of private payment options could have a profound impact on banks and the legacy financial system that central bank policy relies upon.

(Reporting by Howard Schneider; Editing by Andrea Ricci)

LONDON (Reuters) – A central bank digital currency would not pose an excessive challenge for the Bank of England’s operations, Andrew Hauser, the BoE’s executive director for markets, said on Wednesday.

“By themselves, balance sheet considerations do not obviously present any ‘redline’ arguments against CBDC adoption, if that is the chosen way forward,” Hauser said in remarks ahead of a discussion hosted by the Federal Reserve Bank of New York.

“While the technologies for such currencies would be new, the use of the central bank balance sheet to provide state-backed transactional money is one of our most longstanding functions,” Hauser added.

(Reporting by David Milliken, Editing by Kylie MacLellan)

(Reuters) – Binance Labs, the venture capital arm of cryptocurrency exchange Binance, said on Wednesday it had raised $500 million for its investment fund focused on companies involved in the blockchain and Web3 spaces.

The fund is supported by investment firms DST Global Partners, Breyer Capital and Whampoa Group as well as by other private equity firms and family offices, the company said https://www.binance.com/en/blog/ecosystem/binance-labs-closes-$500m-investment-fund-to-boost-blockchain-web3-and-valuebuilding-technologies-421499824684903944.

Web3 is a somewhat vague term for a utopian version of the internet that is decentralized and is based on digital record-keeping technology blockchain, which also drives the platforms running cryptocurrencies such as bitcoin and ether.

Despite the fall in the prices of cryptocurrencies, big institutional investors have been trying to get involved more heavily in the space, with venture capital giant Andreessen Horowitz having raised billions for its crypto-focused funds.

The interest around cryptocurrencies has spilled over into blockchain and Web3, with high-profile investment companies such as Silver Lake and SoftBank also betting on the sector.

(Reporting by Niket Nishant in Bengaluru; Editing by Amy Caren Daniel)

(This May 31 story corrects second paragraph to say Fidelity Digital Assets plans to fill 210 new positions, and not 110 as previously reported)

(Reuters) – Fidelity Investments’ digital assets arm will double down on hiring this year as it looks to beef up its resources to serve clients who want to invest in crypto assets that trade round the clock.

Fidelity Digital Assets, which currently employs nearly 200 people, is looking to fill 210 new positions in client services, technology and operations that would also focus on assets beyond bitcoin, a company spokesperson told Reuters on Tuesday.

“As the demand for digital assets continues to steadily grow and the marketplace evolves, we will continue to expand our hiring efforts,” Tom Jessop, president of Fidelity Digital Assets, said.

Last month, Fidelity Investments became the first major retirement plan provider to allow individuals to allocate part of their savings in bitcoin through their 401(k) investment plans.

News of the hiring comes weeks after cryptocurrencies suffered a major pullback following the collapse of stablecoin terraUSD. Stablecoins are digital tokens pegged to the value of traditional assets.

Bitcoin was last trading at $31,594, down more than half from its all-time high of $69,000 in November.

The digital currency market rout hasn’t deterred private investments, with Hong Kong-based crypto lender and asset manager Babel Finance raising $80 million at a $2 billion valuation last week, while venture capital giant Andreessen Horowitz raised $4.5 billion for its fourth cryptocurrency fund.

(Reporting by Medha Singh in Bengaluru; Additional reporting by Jamie McGeever; Editing by Shounak Dasgupta)

By Sarah N. Lynch

WASHINGTON (Reuters) – A New York couple accused of laundering $4.5 billion in cryptocurrency tied to the 2016 hack of digital currency exchange Bitfinex are still negotiating a possible plea deal while reviewing more than 1.1 gigabytes of evidence in the case, prosecutors said.

Ilya “Dutch” Lichtenstein, 34, and his wife, Heather Morgan, 32, the self-proclaimed “Crocodile of Wall Street,” were due to appear in a federal court in Washington this coming Friday.

But in a court filing on Monday, U.S. Memorial Day, federal prosecutors asked to postpone the hearing until Aug. 2, citing “discussions regarding possible resolutions of the case short of trial” and the need for the defendants to review “voluminous financial records” turned over by the government.

Lichtenstein and Morgan were arrested in February and accused in a criminal complaint of conspiring to launder 119,754 bitcoin stolen after a hacker in 2016 broke into Bitfinex and initiated more than 2,000 unauthorized transactions.

U.S. Justice Department officials said the transactions at the time were valued at $71 million in bitcoin, but with the rise in the currency’s value, the value reached $4.5 billion at the time of their arrest.

The couple had active public profiles, with Morgan known as rap singer “Razzlekhan,” a pseudonym that she said on her website referred to Genghis Khan “but with more pizzazz.”

A grand jury has yet to return an indictment against the pair, after prosecutors first signaled in March they had agreed to pause the Speedy Trial Act in order to discuss a possible plea deal.

Lichtenstein is being held in jail without bond, while Morgan was released to house arrest.

(Reporting by Sarah N. Lynch; Editing by Howard Goller)

By Huw Jones

LONDON (Reuters) – Global regulators said on Tuesday they will complete work by year end on how much capital banks should hold to cover cryptoassets on their books.

Last June the committee proposed that banks set aside enough capital to cover losses on any bitcoin holdings in full.

Certain tokenised traditional assets and stablecoins could, however, come under existing capital rules and be treated like bonds, loans, deposits or commodities.

Earlier this month TerraUSD, a stablecoin tied to the U.S. dollar, collapsed.

“Recent developments have further highlighted the importance of having a global minimum prudential framework to mitigate risks from cryptoassets,” the Basel Committee said in a statement.

“Building on the feedback received by external stakeholders, the Committee plans to publish another consultation paper over the coming month, with a view to finalising the prudential treatment around the end of this year.”

Countries which are members of Basel are committed to applying its agreed principles in their own national rules.

The committee also said it has agreed to a finalised set of principles for supervising climate-related financial risks at banks.

“The principles, which will be published in the coming weeks, seek to promote a principles-based approach to improving risk management and supervisory practices to mitigate climate-related financial risks,” Basel said.

The committee has also agreed that the euro zone is one domestic jurisdiction when it comes to calculating an extra capital buffer for large, globally systemic banks which are based there.

Treating their intra-euro zone exposures as domestic, which attracts lower capital charges than non-domestic exposures, should reduce the size of the extra capital buffer requirements for some euro zone lenders.

The European Central Bank, which regulates big euro zone lenders, said it was a step toward a more integrated banking sector in Europe and the creation of a truly domestic market.

Fitch Ratings said last December the change could see some banks like BNP Paribas drop out of the extra global buffer requirement altogether.

(Reporting by Huw Jones; editing by Jonathan Oatis)

LONDON (Reuters) – Sell in May? They certainly did, but rather than go away as the old stock market adage suggests, traders returned to aggressively buy the dip, causing some of the wildest monthly swings in recent times.

There was plenty of selling in the first half of the month across asset classes, driven by aggressive central banks, inflation and China’s lockdown policies. But markets subsequently started dialling back expectations of U.S. interest rate rises.

Now worries over rising prices are back at the forefront; on Tuesday, oil climbed above $123 per barrel and euro zone data showed record 8.1% inflation in May.

All that means “there will be a large degree of scepticism in the market that we have seen the bottom yet”, said Stuart Cole, chief macro strategist at Equiti Capital.

Below is a summary of how some major asset classes fared this month:

1/ MONEY MARKETS

U.S. 10-year Treasury yields are ending May near where they started, but in between was a rise to 3-1/2-year highs above 3.2%, a tumble to six-week lows, and then another rise on the last day of the month.

The moves are consistent with the ebb and flow of Fed rate hike expectations, which in early May implied U.S. interest rates would peak above 3.3%.

Growth fears and weak economic data trimmed that bet to around 2.9%, before oil’s surge and hawkish comments from Fed governor Christopher Waller pushed futures back above 3%.

Lack of visibility on interest rates and the economy will “continue to feed volatility,” said Francois Savary, cio of wealth manager Prime Partners. “Where the terminal rate is, still remains the key issue.”

Bets on the European Central Bank swung even more. Some 175 bps of rate hikes are priced for the coming year, versus 123 bps in early May, as policymakers signalled an exit from negative rates by September. (Graphic: cooling rate bets, https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwegwxvo/cooling%20rate%20%20bets.JPG)

2/ V-SHAPED MONTH ON STOCKS

The MSCI’s global stocks benchmark had burnt nearly $5 trillion of value at its bottom on May 9 versus its peak during the month, plumbing its lowest in around 18 months.

From that point the index has rallied 8% as markets unwound the most aggressive Fed tightening bets. So the MSCI World index is set to end May with a small gain, returning to a market capitalisation north of $60 trillion.

The stock segment arguably most vulnerable to interest rate swings – U.S. tech – meanwhile plunged 15% in the first 20 days of the month, before rebounding 12%.

Goldman Sachs said a sustained rebound hinged on “additional clarity on how fast inflation decelerates from here, how monetary policy reacts, and the implications for the growth outlook.”

U.S. junk-rated corporate bonds too saw wild swings, with the risk premiums demanded by investors shooting as high as 494 bps, from 405 at the start of May. They are now back at 419 bps. (Graphic: MSCI AC World Market Cap, https://fingfx.thomsonreuters.com/gfx/mkt/zdvxowjzlpx/MSCI%20AC%20World%20in%20May.PNG)

3/ EURO-DOLLAR DANCE

A hawkish ECB pivot infused fresh life into the euro, lifting it as much as 4% from five-year lows hit earlier this month.

However, while an imminent end to negative euro zone interest rates has knocked the U.S. dollar index off two-decade highs, investors are wary of screaming “peak dollar”, given the Fed shows no signs of slowing its policy tightening campaign.

And as the European Union prepares to slash Russian oil imports, the recession threat could return to haunt the euro. (Graphic: King dollar, https://fingfx.thomsonreuters.com/gfx/mkt/gdpzyejzyvw/King%20dollar.JPG)

4/ CRYPTO CRASH

Markets were rocked by the mid-May collapse of TerraUSD, a stablecoin which lost its 1:1 dollar peg triggering big falls in other crypto assets.

But unlike stocks, they have not witnessed any meaningful recovery.

On May 12, three days after the TerraUSD peg began to break, bitcoin fell to $25,401, its lowest since December 2020. The largest coin by market cap ended up shedding around 20% during the month, its biggest monthly loss in a year..

By the time TerraUSD collapsed, the total market cap of all cryptocurrencies had slipped as low as $1.14 trillion, according to CoinMarketCap. It stands now at $1.3 trillion, down around 25% this month and more than 56% below November’s peak of almost $3 trillion.

Holders of TerraUSD and its linked token, luna, endured losses of around $42 billion, blockchain analytics firm Elliptic estimates. (Graphic: Crypto v2, https://fingfx.thomsonreuters.com/gfx/mkt/znpneomddvl/Crypto%20chart%20v2.png)

5/ OIL DASH

On oil markets there was none of the yo-yoing other asset classes witnessed this month. Instead Brent crude futures marched to a sixth consecutive month of gains, the biggest rising streak in a decade, adding to the headaches of policymakers battling to rein in inflation.

Brent topped $124 per barrel on Tuesday, its highest since March 9, after European Union leaders agreed to slash oil imports from Russia by year-end.

Prices found further support as China announced an end to its COVID-19 lockdown, and will allow people in Shanghai to leave their homes and drive their cars from Wednesday. That will likely add to global energy demand, just as holiday season demand picks up in the Northern Hemisphere summer. (Graphic: brent crude, https://fingfx.thomsonreuters.com/gfx/mkt/dwpkrnyryvm/brent%20crude.JPG)

(Reporting by Danilo Masoni, Sujata Rao, Saikat Chatterjee and Samuel Indyk; Additional reporting by Yoruk Bahceli; Editing by David Holmes)

By Huw Jones

LONDON (Reuters) – Britain’s finance ministry set out plans on Tuesday for adapting existing rules to deal for any major stablecoin collapses, such as with TerraUSD this month.

It is the latest sign of how regulators are trying to catch up with fast-moving developments in crypto markets which straddle national borders.

“Since the initial commitment to regulate certain types of stablecoins, events in cryptoasset markets have further highlighted the need for appropriate regulation to help mitigate consumer, market integrity and financial stability risks,” the ministry said.

Banks, insurers and mainstream payment companies must comply with rules which ensure their deposit accounts, policies or services can be transferred quickly to another provider if they go bust, to help avoid panic and contagion in markets.

Stablecoins, which play a pivotal role in crypto markets, are digital tokens pegged to the value of traditional assets, such as the U.S. dollar, and are seen as having a bigger role in payments.

The collapse of TerraUSD, a popular stablecoin which was the 10th largest cryptocurrency, triggered central bank concerns in a little-regulated sector.

“The failure of a systemic digital settlement asset firm could have a wide range of financial stability as well as consumer protection impacts,” the ministry said in a consultation paper https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1079348/Stablecoin_FMISAR_Consultation.pdf.

“This could be both in terms of continuity of services critical to the operation of the economy and access of individuals to their funds or assets.”

While work continues on whether bespoke rules were needed for winding down failed stablecoins, existing rules for handling payment firm failures should be adapted, the ministry said.

It proposed amending the Financial Market Infrastructure Special Administration Regime, which would give the Bank of England powers to ensure continuity in stablecoin payment services during a crisis.

(Reporting by Huw Jones; Editing by David Holmes)

By Jamie McGeever

(Reuters) – If you assumed crypto was just a young person’s game, think again.

More people in the United States than ever before are turning to cryptocurrencies to help fund their retirement, it seems, even as the recent market carnage provides a stark reminder that this wild market is not for the faint-hearted.

Some 27% of Americans aged 18-60 – around 50 million people – have owned or traded crypto in the past six months, a poll published last week by crypto exchange KuCoin found.

Yet older folk are more devoted to the young asset class than the general population, according to the survey carried out at the end of March, with 28% of those aged 50 and above betting on crypto as part of their early retirement plans.

Their most popular for investing in crypto were that they saw it as the future of finance, they didn’t want to miss a hot trend, and they saw it as a way to diversify their portfolios. (See GRAPHIC)

The market turmoil of recent weeks has hushed talk earlier in 2022 that bitcoin and other crypto would win mainstream acceptance and be ushered into pension plans.

“If they (investors) want crypto, it should be a very small allocation of their portfolio, and they should be prepared to lose it,” said Erik Knutzen, chief investment officer for multi-asset class strategies at Neuberger Berman.

“We would not recommend it to everybody.”

Indeed bitcoin is trading at around $30,000, down 60% from a peak of $69,000 in November. And the market meltdown means many newcomers’ investments are deeply in the red.

Nonetheless, crypto investors and analysts are watching like hawks for any indication that bitcoin could bounce back.

JP Morgan’s Nikolaos Panigirtzoglou and his global strategy team said last week the crypto mayhem had soured investor sentiment so much that certain metrics signalled a “good entry point for long-term investors.”

Bitcoin funds, including exchange-traded funds (ETFs) saw the largest outflow since May 2021, JP Morgan said, adding that its position proxy for Chicago Mercantile Exchange bitcoin futures was approaching oversold territory.

Using a model based on the volatility ratio of bitcoin to gold, the team estimate “fair value” for bitcoin at $38,000. (Graphic: Crypto investor survey – KuCoin, https://fingfx.thomsonreuters.com/gfx/mkt/gdvzyebznpw/KUCOIN.jpg)

$100K OR MORE

The KuCoin poll comes a week after a survey of 11,000 adults by the Fed found that 12% of Americans dabbled in cryptocurrencies as an investment last year.

It did not break down participants by age, but found almost half of those holding crypto for an investment had an annual income of $100,000 or more, while almost a third had an income under $50,000.

If older investors are in the new crypto vanguard, though, has there been a rush from asset managers to meet this demand?

Fidelity Investments caused a stir in April when it announced individuals will soon be allowed to allocate part of their retirement savings in bitcoin through their 401(k) investment plans.

“Fidelity always operates and makes decisions with the highest level of integrity and an unwavering commitment to our customers, including those saving for retirement,” a Fidelity spokesperson told Reuters.

But if anecdotal evidence from a Reuters-hosted summit of investors and asset managers in New York last week is any guide, it may have the 401k crypto market to itself for a while yet.

The general consensus was that crypto is prohibitively volatile for retirement purposes. Unless you are a sophisticated investor, such as a hedge fund, or are prepared to swallow a hefty loss, then it is best to steer clear.

(Reporting by Jamie McGeever; Editing by Pravin Char)

(Reuters) – Bitcoin rose 7.93 % to $31,780.51 at 2200 GMT on Monday, up $2,334.8 from its previous close.

The world’s biggest and best-known cryptocurrency is up 25.1% from the year’s low of $25,401.05 on May 12.

Ether, the coin linked to the ethereum blockchain network, rose 9.8 % to $1,989.38 on Monday, adding $177.54 to its previous close.

(Reporting by Ann Maria Shibu in Bengaluru; Editing by David Gregorio)

SHANGHAI (Reuters) – China is using the digital yuan to stimulate consumption in its pandemic-hit economy, with more e-CNY applications expected in future to boost transparency and effectiveness of government policies.

The southern city of Shenzhen started distributing 30 million yuan ($4.50 million) worth of free digital cash on Monday to revive consumption and aid businesses. It comes days after Xiong’an New Area in northern Hebei province, launched a similar campaign to hand out 50 million yuan worth of e-CNY “red packets” as gifts.

China is at the fore of a global race to develop central bank digital currencies. Issuing e-CNY subsidies can both aid consumption and further promote use of the electronic yuan.

Transactions using e-CNY totalled 87.6 billion yuan at the end of 2021, with 261 million individual e-wallets opened, according to the central bank.

“Previously, when the government issued subsidies, there could be certain obstacles before the money reaches the recipients,” said G. Bin Zhao, senior economist at PwC China.

“With e-CNY, the cash directly lands into your hands,” boosting transparency, he said.

Zhao added that in the future, the government can use e-CNY for pension payments, fiscal subsidies and even infrastructure spending.

Xia Chun, chief economist at wealth manager Yintech Investment Holdings, said that compared with traditional means, e-CNY is more efficient and swift when it comes to subsidies, although he feels the size of the current consumption stimulus is too small.

Lin Yifu, an economist at Peking University said in a speech earlier this month that China should hand out 1,000 yuan to each family in locked-down areas, half of which can be in digital yuan.

In the latest campaign, consumers in Shenzhen can join a lottery for the free e-CNY, which can be used to shop online or at stores. In Xiong’an, digital cash subsidies can be used to buy products including food, electronics appliances and furniture.

($1 = 6.6600 Chinese yuan)

(Reporting by Samuel Shen and Andrew Galbraith; Editing by Jacqueline Wong)

By Hernan Nessi and Agustin Geist

BUENOS AIRES (Reuters) – In the Crypstation cafe in downtown Buenos Aires, trendy young Argentines order their lattes and pastries surrounded by screens with real-time cryptocurrency price quotes and a huge neon Bitcoin logo. The bill can be paid in digital money, too.

Savers in the South American nation are increasingly being drawn to cryptocurrency to offset years of painful inflation, now running near 60% – shrugging off a recent market crash and El Salvador’s troubled experiment with virtual tender.

“The local environment is pushing people to protect their capital in cryptocurrencies and so we see growth speeding up,” said Mauro Liberman, 39, one of the founders of the cafe, which is aimed at promoting the use of digital tender.

“Throughout Latin America the growth potential is enormous,” he said, adding that most local users were buying it as a way to hoard their savings. “It is an avalanche that won’t be stopped.”

An April report from Americas Market Intelligence showed crypto penetration in Argentina was 12%, around double the level of Mexico and Brazil. Adoption in hyperinflation-plagued Venezuela is even higher, according to a recent Chainalysis report. (Graphic: Argentina: crypto is king – https://graphics.reuters.com/CRYPTO-CURRENCY/ARGENTINA/gdpzyeybxvw/chart.png)

‘I LOSE LESS’

The draw is a lack of confidence in the local peso currency, which has depreciated 14% this year against the dollar. Capital controls limiting foreign exchange to $200 monthly are also spurring crypto adoption.

Annual inflation rose to 58% in April and could go as high as 70% this year, a rate which makes crypto attractive, despite the recent crash which has seen stablecoins like TerraUSD and Tether slide, and bitcoin drop to a 16-month low.

Victor Levrero, 44, an IT specialist in Buenos Aires province, puts his extra savings into stablecoin and bitcoin each month after using up his $200 quota to convert pesos to dollars. He doesn’t bother with fixed-term peso savings.

“Basically, it’s because I lose less,” he said. “With Argentine inflation of between 60-70%, and fixed terms paying 30-35%, it just doesn’t work.”

Local crypto platforms like Lemon Cash and Buenbit told Reuters that their user base had ballooned over the last year.

The central bank has warned repeatedly about the risk of investing in volatile digital currencies, and some adopters are taking it carefully.

Marcelo Vila, 37, a self-employed computer technician, said for now he only he had a small amount invested in bitcoin and Ether.

“The idea is to expand the proportion of funds invested in crypto,” he said. “But until I get to know the crypto market, I can’t put a lot of money into it.”

Sebastian Carsorio, 23, from a poor Escobar neighborhood outside the capital, has little to lose. He is looking to dig himself out of poverty using a home-made cryptocurrency mine he assembled with recycled computer parts from his work.

“I repaired the things and put it together in a computer,” he told Reuters at his home, where he had screens showing how the mining is going. He started with Ethereum and then bitcoin – which allowed him to buy some land and go back to school.

“I’ll keep mining because it’s a good way of saving,” Carsorio said, explaining that he gets a better exchange rate for pesos than he would on the street. “When money has been tight, mining has saved me many times.”

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Argentina: crypto is king (Interactive graphic) https://tmsnrt.rs/38x0Kdi

Argentina: crypto is king https://tmsnrt.rs/3MqdpgK

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(Reporting by Hernan Nessi and Agustin Geist; Additional reporting Horacio Soria; Editing by Adam Jourdan and Rosalba O’Brien)

(Reuters) – Binance said on Friday its legal entity in Italy had registered with the regulator in the country, as the major cryptocurrency exchange seeks to gain traction in Europe.

The registration of Binance Italy, which was established in recent months, could potentially make the company more accountable and reduce the prospects for money laundering.

Binance said it could now open offices in Italy and expand the local team. The company is one of the 14 virtual asset operators to be registered with the Organismo degli Agenti e dei Mediatori (OAM), which regulates the crypto industry in Italy.

The move comes almost a year after Binance was forced to dial back on its product offerings across Europe after coming under scrutiny from regulators. In Italy, the company had to wind down its futures and derivatives business.

Earlier this month, Binance’s Chief Executive Officer Changpeng Zhao said the company had also registered with France’s market regulator. Binance is also seeking registration in Switzerland, Sweden, Spain, Netherlands, Portugal and Austria.

(Reporting by Niket Nishant in Bengaluru and Maria Pia Quaglia in Milan; Editing by Amy Caren Daniel)

NEW YORK (Reuters) – The U.S. Securities and Exchange Commission on Friday rejected a proposal to list and trade a carbon-neutral spot bitcoin exchange-traded fund (ETF) by asset management firm One River on the NYSE Arca exchange.

The action was the latest in a series of rejections by the market regulator to approve a bitcoin ETF that tracks the underlying digital asset, including proposals from Fidelity, NYDIG and SkyBridge earlier this year.

(Reporting by John McCrank)

(Reuters) – Russia is considering allowing cryptocurrency to be used for international payments, Interfax news agency quoted a government official as saying on Friday.

“The idea of using digital currencies in transactions for international settlements is being actively discussed,” Ivan Chebeskov, head of the finance ministry’s financial policy department, was quoted as saying.

Russian officials are wrestling with how to regulate the country’s crypto market and use of digital currencies, with the finance ministry opposed to the central bank’s calls for a blanket ban.

Discussions have been ongoing for months and though the government expects cryptocurrencies to be legalised as a means of payment sooner or later, no consensus has yet been reached.

The finance ministry is discussing adding the latest proposal on international payments to an updated version of a draft law, the Vedomosti newspaper reported on Friday, citing government officials.

Allowing crypto as a means of settlement for international trade would help counter the impact of Western sanctions, which has seen Russia’s access to traditional cross-border payment mechanisms “limited,” Chebeskov said.

(Reporting by Reuters)

By Lindsay Dunsmuir

(Reuters) – The world is moving rapidly toward increasing use of digital payments and an official digital version of the U.S. dollar could help safeguard its global dominance as other countries issue their own, Federal Reserve Vice Chair Lael Brainard said on Thursday.

“I don’t think we should be taking the global status of the dollar for granted and in a world where other major jurisdictions move to the issuance of their own digital currencies it is important to think about whether the United States would continue have the same type of dominance without also issuing one,” she told lawmakers in Congress.

Fed policymakers remain divided on the need for a central bank digital currency (CBDC) and have just finished a four-month public consultation period soliciting feedback on the idea.

Brainard has emerged as a supporter of the idea while some other Fed policymakers, including Fed Governor Christopher Waller, are more skeptical and point out that many dollar transactions are already digital, and have also raised privacy concerns. The Fed as a whole has indicated it would not launch one without clear support from the White House and lawmakers.

She reiterated that no decision has been made, and acknowledged the risks of both sides, but noted that in a world that is rapidly digitalizing creating a digital currency could help ensure financial system stability as crypo-assets and digital currencies developed by other countries become increasingly popular.

“We recognize there are risks of not acting, just as there are risks of acting,” Brainard said during a hearing on the issue before the U.S. House of Representatives Financial Services Committee, noting that even if it was agreed to set up one it would take perhaps five years to put a U.S. digital dollar in place.

That puts it behind its other major global central bank peers, including the ECB, Bank of Japan and Bank of England, on the process of possible adoption. China is currently piloting its own CBDC and in total nine countries have launched one and another 87 countries are exploring the option, according to the Atlantic Council think tank.

CRYPTO MARKETS NEED MORE REGULATION

The risks of loosely-regulated cryptocurrencies and stablecoins, which exploded in value during the COVID-19 pandemic, have come into sharp focus with the crypto market slumping sharply this month after the downfall of major “stablecoin” terraUSD. Leading cryptocurrency Bitcoin has dropped more than 50% since November.

“These events underscore the need for clear regulatory guardrails to provide consumer and investor protection, protect financial stability, and ensure a level playing field for competition and innovation across the financial system,” Brainard told the committee.

Unlike cryptocurrencies, which are typically run by private actors, a CBDC would be issued and backed by the central bank. If the United States goes ahead with creating one, Brainard said the Fed should mitigate the risk of “disintermediating banks,” given their centrality to the financial system, by, for instance, limiting the amount an individual could hold or transfer.

Brainard also said her preference would be for a U.S. digital dollar not to be interest bearing in order to prevent a reduction of deposits elsewhere in the banking system.

(Reporting by Lindsay Dunsmuir; Editing by Aurora Ellis)

By Jessica DiNapoli and Divya Chowdhury

DAVOS, Switzerland (Reuters) – Cryptocurrency firms, many of which lined the main street in Davos this week, were told they will need to clean up their act before gaining complete acceptance from the World Economic Forum’s old guard.

“The future of crypto, I’m sorry to say, looks regulated to me,” said Nela Richardson, senior vice president and chief economist for human resources software provider ADP. She said she thinks central banks will step in to provide oversight.

Blockchain and crypto firms blitzed Davos with parties, briefings and panels on the sidelines of the main conference, with the hope of gaining credibility and inking deals with companies ranging from Tyson Foods Inc to Salesforce.com Inc also perched on the main street.

Some of the events outside the security cordon of the main event featured speakers from traditional financial institutions, including Perella Weinberg Partners and State Street.

But, inside the gates, there was a cry for regulation and concerns about risks from the sector, including about it being used illegally by sanctioned Russians.

“Crypto currencies have received a big push from (Russian) sanctions,” Saudi finance minister Mohammed al-Jadaan said. “And I’m worried because it could be used for illicit activities.”

David Rubenstein, co-founder and co-chairman of U.S. buyout firm Carlyle, shared his concerns.

“A lot of wealthy people who want to hide their assets after the Russian situation will say I will put 5% to 10% in some basket of cryptocurrencies,” he said.

“The government won’t know what I have, they can’t get it and I can always get access to it.”

CRASHING INTO THE FUTURE

The roles of regulators, authenticators and custodians have come into sharp focus in Davos, which begun after a crypto crash that saw digital assets lose some $800 billion in market value and one of the top ten digital coins become worthless.

“It’s still early days (for crypto) in terms of an investment class,” Ling Hai, co-president for international markets at Mastercard, told the Reuters Global Markets Forum (GMF). “It needs to be sanctioned and regulated by the central bank and government. It has monetary implications. Value needs to be stable.”

However, crypto and financial executives on the sidelines said the rout would strengthen the industry because strong technology and coins would survive it.

“There’s been a lot of volatility but the reality is it’s here to stay,” said Justin Fogerty, managing director and founder at financial consultancy Pivotas AG. “I think what’s happened with the volatility, (it) has actually taken a lot of speculators and gamblers out of the market.”

Cryptocurrency firms have also attracted new interest at Davos, especially from locations looking for investment.

Vit Jedlick, the President of Liberland, a micronation claiming disputed land between Serbia and Croatia, attended an event for Polkadot in the hope of starting a stronger partnership with the blockchain technology.

The Indian delegation to Davos, which included six state governments, was housed in pavilions surrounded by blockchain and crypto houses, and has been meeting many of them to attract investment, particularly in education and training.

“When you map out where the next generations of developers are and where is the talent and where actually should we go, India pops up very, very high on the map,” Marieke Flament, CEO at NEAR Foundation, which backs blockchain projects, told GMF.

Miami Mayor Francis Suarez, in the spotlight over the crash of the city’s MiamiCoin, said he was working with the operators to fix glitches.

“I still am taking my salary in bitcoin,” Suarez told a WEF panel. “I will note for the record it’s not my only salary.”

(Reporting by Jessica DiNapoli, Divya Chowdhury and Aditya Kalra in Davos; Editing by Alexander Smith)

(Reuters) – Creating an official digital version of the U.S. dollar could help ensure financial system stability as crypo-assets and digital currencies developed by other countries become increasingly popular, Federal Reserve Vice Chair Lael Brainard said on Wednesday.

“As we assess the future digital financial system, it is prudent to consider how to preserve ready public access to safe central bank money, perhaps through the digital analogue of the Federal Reserve’s issuance of physical currency,” Brainard said in testimony released in advance of her appearance on the issue before the U.S. House of Representatives Financial Services Committee on Thursday.

“We recognize there are risks of not acting, just as there are risks of acting,” she said.

Fed policymakers remain divided on the need for a central bank digital currency (CBDC) and have just finished a three-month public consultation period soliciting feedback on the idea. The Fed has also indicated it would not launch one without clear support from the White House and lawmakers.

That puts it behind its other major global central bank peers, including the ECB, Bank of Japan and Bank of England, on the process of possible adoption. China is currently piloting its own CBDC and in total nine countries have launched one and another 87 countries are exploring the option, according to the Atlantic Council.

The risks of loosely-regulated cryptocurrencies and stablecoins, which exploded in value during the COVID-19 pandemic, have come into sharp focus with the crypto market slumping sharply this month after the downfall of major “stablecoin” terraUSD. Leading cryptocurrency Bitcoin has dropped more than 50% since November.

“These events underscore the need for clear regulatory guardrails to provide consumer and investor protection, protect financial stability, and ensure a level playing field for competition and innovation across the financial system,” Brainard said.

Unlike cryptocurrencies, which are typically run by private actors, a CBDC would be issued and backed by the central bank. If the U.S. goes ahead with creating one, Brainard said, it ought to be designed so that commercial banks, given their centrality to the financial system, are not disintermediated, by for instance limiting the amount an individual could hold or transfer.

Brainard also argued a U.S. CBDC could safeguard the dollar’s global importance.

Other Fed policymakers, including Fed Governor Christopher Waller, are more skeptical and point out that many dollar transactions are already digital, and have also raised privacy concerns.

(Reporting by Lindsay Dunsmuir and Ann Saphir; Editing by Richard Pullin)

By Hannah Lang

(Reuters) – Developers behind failed stablecoin TerraUSD have voted to abandon the token in favor of creating a new blockchain and digital asset weeks after the cryptocurrency collapsed, according to a tweet from the Terra blockchain protocol.

Unlike most other major stablecoins which are backed by other assets, TerraUSD’s value was derived by complex algorithmic processes, linked to another paired token called Luna. Both tokens have lost nearly all of their value since TerraUSD, known as UST, slipped below its 1:1 peg to the dollar earlier this month.

Under the recovery plan for the Terra ecosystem, developers will create a new Terra blockchain with a revived Luna token.

The original blockchain will be renamed Terra Classic, while the original Luna token will be called Luna Classic.

Terra backers will distribute the new Luna token to Luna Classic and UST holders. In a tweet, Terra said that it would work with crypto exchanges Binance and Bybit to distribute the new asset to people who held Luna Classic and UST on exchanges.

“Our strength will always be in our community, and today is the most resounding sign yet of our resilience. We can’t wait to resume our work together building the future of money,” Terra said in a tweet.

Prior to its collapse on May 9, TerraUSD had a market cap of more than $18.5 billion and was the tenth-largest cryptocurrency. Its market cap is now hovering at around $1 billion.

(Reporting by Hannah Lang in Washington; editing by David Evans)