Tag: Cryptocurrencies

By Tom Wilson and Elizabeth Howcroft

LONDON (Reuters) – Hackers have stolen cryptocurrency worth almost $615 million from a blockchain project linked to popular online game Axie Infinity, the latest cyberheist to hit the digital asset sector.

Ronin, a blockchain network that lets users transfer crypto in and out of the game, said on Tuesday the theft happened on March 23 but was not detected until almost a week later.

Here’s what you need to know about the Ronin heist.

CRYPTO’S A BIG DEAL NOW, RIGHT?

Indeed.

Bitcoin and other digital currencies have exploded into public view in recent years, with mainstream investors embracing the sector in droves during the COVID-19 pandemic.

The sector’s now worth over $2.1 trillion. As money has poured in, the hacks and heists that have long plagued crypto have also grown also size.

AND HOW DOES RONIN FIT IN?

Ronin is used in Axie Infinity, one of the world’s most popular online games involving cryptocurrencies.

Its products include a digital wallet for storing crypto, and a “bridge” that allows users to move funds in and out of the game. This is where the crypto were stolen from.

Ronin takes its name from the samurai warriors of feudal Japan who did not serve any particular lord. The name “represents our desire to take the destiny of our product into our own hands,” Axie Infinity said in a blog post.

Vietnam-based Sky Mavis, which launched Axie Infinity in 2018, did not respond to multiple requests for comment. Ronin also did not return Reuters’ messages.

Jeffrey Zirlin, one of Axie Infinity’s founders, said at a conference on Tuesday: “It is one of the bigger hacks in history and we’re fully committed to continue building.”

HOW DID THE HEIST HAPPEN?

The Ronin hacker used stolen private keys – the passwords needed to access crypto funds – Ronin said in a blog post, after targeting computers connected to its network that help confirm transactions.

Ronin said it discovered the hack on Tuesday and that it was working with “various government agencies to ensure the criminals get brought to justice”.

The identity of the hackers is still unclear.

AND AXIE INFINITY?

Axie Infinity says it has 2.8 million daily active players, with some $3.6 billion previously traded on its marketplace, making it one of the most popular blockchain-based online games.

Set in a fictional universe, players can collect, trade and play with virtual creatures called Axies, which are traded in the form of non-fungible tokens (NFTs) and sell for hundreds of thousands of dollars.

It is the largest NFT brand by all-time sales volume, according to market tracker CryptoSlam.

The game has attracted venture capital funding, raising $152 million in October from investors including Andreessen Horowitz.

Axie and other “play-to-earn” games allow players to spend crypto and earn financial rewards. They have surged in popularity in the past year, as a frenzy in the NFT world prompted investors to speculate in the hope of large returns.

WHERE’S THE LOOT NOW? AND ARE USERS AFFECTED?

Most of the stolen funds are still in a digital wallet, which is available to view.

Blockchain Intelligence Group, a Vancouver-based crypto tracker, said that the hackers had moved a small amount of the funds to major exchanges FTX, Crypto.com and Huobi.

Huobi said it was investigating the hack and communicating closely with Axie Infinity. FTX and Crypto.com did not immediately responded to requests for comment.

Ronin said in a blogpost that Sky Mavis was “committed to ensuring that all of the drained funds are recovered or reimbursed,” without giving details. Making sure there is no loss of funds “is our top priority”, it added.

It said it was working with major blockchain tracker Chainalysis to trace the stolen funds. Chainalysis declined to comment.

(Reporting by Tom Wilson; Editing by Kirsten Donovan)

LONDON (Reuters) – Hackers have stolen cryptocurrency worth almost $615 million from a blockchain project linked to the popular online game Axie Infinity, in the latest cyberheist to hit the digital asset sector.

Ronin, a network that allows the transfer of crypto coins across different blockchains, said on Tuesday that hackers stole on March 23 some 173,600 ether tokens and 25.5 million USD Coin tokens.

At the time of the announcement, the loot was worth around $615 million – and, due to a change in the value of the tokens, some $540 million at the time of the hack – making the theft one of the largest on record.

Here are some of the other major thefts to have plagued the crypto sector since bitcoin was born in 2008.

POLY NETWORK

Hackers stole around $610 million in August 2021 from Poly Network, a platform that facilitates peer-to-peer token transactions. The hackers behind the heist later returned nearly all of the stolen funds.

The hack underscored vulnerabilities in the burgeoning decentralised finance – DeFi – sector, where users lend, borrow and save in digital tokens, bypassing the traditional gatekeepers of finance such as banks and exchanges.

COINCHECK

In Jan. 2018, hackers stole cryptocurrency then worth around $530 million from Tokyo-based exchange Coincheck. The thieves attacked one of Coincheck’s “hot wallet” – a digital folder stored online – to drain the funds, drawing attention to security at exchanges.

The hack raised questions in Japan https://www.reuters.com/article/us-japan-cryptocurrency-regulation-idUSKBN1FW04F about regulation of the digital asset market. South Korea’s intelligence agency said at the time that a North Korean hacking group may have been behind the heist.

MT. GOX

In one of the earliest and most-high profile crypto hacks, bitcoin worth close to $500 million dollars was stolen from the Mt.Gox exchange in Tokyo – then the world’s biggest – between 2011 and 2014.

Mt.Gox, which once handled 80% of the world’s bitcoin trade, filed for bankruptcy in early 2014 after the hack was revealed, with some 24,000 customers losing access to their funds.

WORMHOLE

DeFi site Wormhole was hit by a $320 million heist last month, with the hackers making off with 120,000 digital tokens connected to the second-largest cryptocurrency, ether.

The crypto arm of Chicago-based Jump Trading, which had the year before acquired the developer behind Wormhole, later replaced the funds “to make community members whole and support Wormhole now as it continues to develop.”

(Reporting by Tom Wilson and Elizabeth Howcroft; Editing by Chizu Nomiyama)

By Pete Schroeder

WASHINGTON (Reuters) – Four women will take seats on the Commodity Futures Trading Commission, returning the derivatives regulator to full strength, after a unanimous U.S. Senate vote hailed as historic by the chair of the Senate Agriculture Committee.

“This confirmation makes history because all four nominees are women, three of whom are women of color,” Senator Debbie Stabenow, the chair, said in a statement.

Senators on Monday confirmed President Joe Biden’s nominations of Kristin Johnson and Christy Goldsmith Romero to Democratic seats on the bipartisan commission and Summer Kristine Mersinger and Caroline Pham to Republican seats.

The five-member commission was being run only by Chairman Rostin Behnam and Commissioner Dawn Stump, who has said she intends to step down from the agency when her term expires in April. Behnam remains as chairman.

The agency polices commodities markets that have become increasingly tumultuous amid a slew of Western sanctions applied to Russia over Ukraine.

The agency is looking also to carve out a central role in monitoring burgeoning cryptocurrency markets, where the agency already monitors some crypto-related products.

(Reporting by Pete Schroeder; Editing by Howard Goller)

By Tom Wilson and Elizabeth Howcroft

LONDON (Reuters) – Bitcoin on Tuesday held ground just below its highest this year, touched a day earlier, with gains for the original cryptocurrency topping 27% since Russia’s invasion of Ukraine.

Bitcoin hit $48,234 on Monday evening, its highest since Dec. 31. It was last trading up 0.9% at $47,553.

Its gains lifted smaller cryptocurrencies that tend to move in tandem with bitcoin. Ether, the second biggest token, hit $3,436 on Monday, its highest since early January.

Market players cited emerging signs of a new wave of adoption of crypto by institutional investors and financial firms, whose interest over the past two years has fuelled crypto’s journey to mainstream asset from niche technology.

Bitcoin has risen over 12% in the last week alone.

Among supportive comments cited were those by BlackRock Inc’s chief executive, who said last week that the Russia-Ukraine war could end up accelerating digital currencies as a tool to settle international transactions.

Such moves signal “growing conviction that the crypto markets are worth dedicating more resources to,” said Noelle Acheson, head of market insights at U.S. crypto firm Genesis.

Though bitcoin and other cryptocurrencies are now spoken of in the same breath as traditional assets from stocks and foreign exchange to bonds, its remains as volatile as ever.

Bitcoin hit an all-time high of $69,000 in November, before tumbling almost 30% in just 24 days.

(Reporting by Tom Wilson and Elizabeth Howcroft; Editing by Frank Jack Daniel)

By Medha Singh and Lisa Pauline Mattackal

(Reuters) – As a bleak first quarter draws to a close, crypto seems to have the wind in its sails. It has pushed through the $2 trillion barrier and is proving surprisingly resilient amid global chaos.

At Monday’s high of $47,765, market leader bitcoin broke above the narrow $34,000-$44,000 range it’s traded in for most of 2022. Through a steady grind higher from a low just above $40,000 on March 21, it has gained 18%.

Its comparative steadiness, versus previous performance at least, contrasts with stock markets, traditional currencies and even safe-haven gold, which have been shaken by the Russian invasion of Ukraine as well as the Federal Reserve’s tightening.

Bitcoin’s jumpiness has waned of late.

Its 30-day volatility is around 4%, about two-thirds the level it was in June 2021, according to futures trading platform Coinglass. The highest this year was 4.56% on March 16.

This measures its deviation from its own standard levels, and bitcoin has still had wild swings, such as a 17% jump on March 1. But it’s distinctly tamer than in 2021 when it could move as much as 40% in a day.

By comparison, the tech-heavy Nasdaq has whipsawed 5-6% on numerous days in 2022, and was down 20% for the year as of March 14, before it rallied to cut half that loss.

“The largest conflict we’ve seen in Europe since World War Two has really rocked global markets,” said Pierce Crosby, General Manager at charting platform TradingView in New York.

“What we have seen across other major assets is a huge fallout – from both the U.S. equity markets as well as global markets,” he added. “Bitcoin has more or less stayed in a pretty tight range … but actually, in terms of the relative strength, it’s very bullish.”

$2 TRILLION CRYPTO

The total value of the cryptocurrency market rose above $2 trillion on Friday, according to analytics platform CoinMarketCap. To put that in context, the market briefly hit $3 trillion on Nov. 10, when bitcoin reached $69,000.

The meandering climb back above $2 trillion has been slow and has also been helped by a mushrooming in coins and tokens – the number CoinMarketCap counts has risen by almost 5,000 since November to stand at 18,511 cryptocurrencies.

Bitcoin’s market capitalisation has reached $902 billion, but it still has a ways to go to reclaim the $1 trillion it commanded in November. While still the dominant crypto, its market share has also fallen gradually from as much as 70% of the total capitalisation in early 2021 to 42% now.

Graphic: Bitcoin dominance – https://fingfx.thomsonreuters.com/gfx/mkt/zjvqkaejkvx/Pasted%20image%201643630277294.png

WHAT LIES AHEAD?

Many a crypto investor has thought they could divine bitcoin’s direction before the fickle cryptocurrency left them sprawled in the financial dust.

“Although bitcoin is remaining strong in the short term, rising oil prices increase the likelihood of a recession over the coming year or so,” said Marcus Sotiriou, analyst at UK-based digital asset broker GlobalBlock.

“Oil has increased by around 25% in the past six days alone, and bitcoin bulls will want to see this tail off for continued strength.”

That said, certain other technical factors are pointing to bitcoin bullishness.

Funding rates, which measure the cost of holding bitcoin via futures, have turned marginally positive after being negative for most of this year, indicating investors are prepared to pay to be long. It stands at 0.003% on analytics platform CryptoQuant, though still below a peak of 0.06% hit in October.

Coinglass’s longs-to-shorts ratio has also climbed from 0.95 on March 20 to 1.1, the highest level in at least four weeks.

Blockchain data provider Chainalysis said an increasing proportion of bitcoin – nearly 60% of total supply – was being held for longer than 52 weeks, up from 54.72% in the last 25 weeks.

Yet Ashwath Balakrishnan, vice president of research at Delphi Digital in Bengaluru, cautioned that it was difficult to identify a lasting market direction.

“Everyone’s a little cautious,” he said. “If (bitcoin) rejects off of $46k and goes back down then it probably means we’re stuck with range-bound conditions for at least another month or so.”

(Reporting by Lisa Mattackal and Medha Singh in Bengaluru; Editing by Vidya Ranganathan and Pravin Char)

By Ceyda Caglayan, Saeed Azhar and Riham Alkousaa

ISTANBUL/DUBAI (Reuters) – Wealthy Russians are pouring money into real estate in Turkey and the United Arab Emirates, seeking a financial haven in the wake of Moscow’s invasion of Ukraine and Western sanctions, according to many property companies.

“We sell seven to eight units to Russians every day,” said Gul Gul, co-founder of the Golden Sign real estate company in Istanbul. “They buy in cash, they open bank accounts in Turkey or they bring gold.”

In Dubai, Thiago Caldas, CEO of the Modern Living property firm, has hired three Russian-speaking agents to meet Russian interest, which he says has leapt tenfold.

Sanctions imposed since the Feb. 24 invasion include Russia’s exclusion from the SWIFT banking system, and the targeting of individual such as oligarchs deemed to be close to President Vladimir Putin.

While Turkey and the UAE have criticised the Russian offensive, Ankara opposes non-U.N. sanctions on Russia and both countries have relatively good ties with Moscow and still operate direct flights, potentially offering routes out for Russians and their cash.

“They are wealthy Russians but not oligarchs,” said Gul of Golden Sign, one of a dozen real estate companies interviewed by Reuters. “They are finding ways to bring their money to Turkey.”

“There are customers buying three to five flats,” Gul added.

Russians have been big buyers of Turkish property for years, behind Iranians and Iraqis, yet the real estate players said there had been a spike in demand in recent weeks.

Though it’s still early days, industry figures bolster their accounts; In February, as troops massed on Ukraine’s border before advancing, Russians bought 509 houses in Turkey, nearly double the number they snapped up last year, according to the country’s statistics office.

That data was still before Western sanctions took hold, and real estate agents said they expected the numbers to grow further, driving up demand already primed by the world’s emergence from the COVID-19 pandemic.

Ibrahim Babacan, whose company in Istanbul builds and sells real estate mainly for foreign buyers in Turkey, said in the past many Russians had wanted to live in resorts such as the Mediterranean Antalya region. Now they were buying apartments in Istanbul to invest their money.

Reuters contacted some Russian homebuyers but they declined to give interviews due to the sensitivity of the situation.

THOUSANDS AND MILLIONS

Both Turkey and the United Arab Emirates offer residency incentives for property buyers. In Turkey foreigners who pay $250,000 for a property and keep it for three years can get a Turkish passport. For a slightly smaller sum Dubai, a major Middle East business hub, offers a three-year residency visa.

Apartments worth 750,000 dirhams ($205,000) – the threshold for visa entitlement – have seen the bulk of the demand but more expensive property on artificial islands such as Dubai’s glitzy Palm Jumeirah have been bought for up to 6 million dirhams, according to the real estate professionals.

“Investors are looking for both capital protection and the opportunity to receive a residential visa in the UAE for temporary relocation,” said Elena Milishenkova of real estate brokerage Tranio, based in Moscow and Berlin, which has a focus on Russian clients buying property overseas.

Her company received almost three times more requests for apartments in Dubai in the first three months of 2022 compared to the same period last year, she said.

Some companies say demand is even higher.

“Right at the beginning of the invasion of Ukraine, we launched a campaign in the region and the number of people who contacted us was … at least 10 times higher than usual,” said Caldas of Dubai’s Modern Living.

The CEO, who hired the Russian-speaking agents last week, said the really wealthy buyers appeared to have been making their preparations and shifted funds out of Russia even before the war broke out a month ago.

CASH AND CRYPTOCURRENCY

For Russians who have bank accounts in Dubai, the process is relatively simple, said Elena Timchenko of broker Royal Home Real Estate, which is based in the emirate.

Others have turned to friends or contacts for help, but for some, the challenge of getting the money together for a purchase has so far been too much, she added.

“The wish to buy in Dubai is one thing, the ability to do so is another,” she said, referring to the difficulties of bringing funds to the Gulf state.

Some newly arrived Russians in Turkey have struggled to make deposits and transfers at banks that are wary of contravening sanctions. Extra layers of compliance and exclusion from Visa and Mastercard add to the difficulty.

The UAE issued guidelines to banks last year to tighten procedures identifying suspicious transactions in an attempt to stem illicit financial flows. That did not stop the country, like Turkey, being added to a list of countries monitored by the FATF global financial crime watchdog.

A senior executive at an Emirati bank said the bank was making the same checks on customers as before, and had received no new guidance from the central bank.

In Istanbul, meanwhile, real estate builder and seller Babacan said that so far those Russian customers he dealt with were paying via banks without problems.

Caldas and Alex Cihanoglu, a realtor also based in Turkey’s largest city, said some Russians were using cash converted from cryptocurrency, now that sanctions had made financial transfers more complex.

“I would say most of the transactions that we’re seeing are in crypto,” Caldas added. “Crypto, especially for this market now, in the difficulties they’re facing, is the channel that is being used.”

(Additional reporting by Ceyda Caglayan and Jonathan Spicer in Istanbul, and Saeed Azhar, Riham Alkousaa, Lisa Barrington and Alexander Cornwell in Dubai; Writing by Ezgi Erkoyun and Dominic Evans; Editing by Pravin Char)

By Kantaro Komiya

TOKYO (Reuters) – Japan will revise its foreign exchange law to prevent Russia from evading Western financial sanctions following Moscow’s invasion of Ukraine through cryptocurrency assets, top government officials said on Monday.

The government will submit a revision of the Foreign Exchange and Foreign Trade Act to the current parliament session to strengthen protections against potential sanction-busting by Russia through digital assets, Chief Cabinet Secretary Hirokazu Matsuno said in a press conference.

Prime Minister Fumio Kishida also called for the law to be amended in a Monday parliament session, where he stressed the need for coordinated moves with Western allies after attending last week’s Group of Seven summit in Belgium.

A finance ministry official told Reuters discussions were under way about the proposed amendment, saying he could not provide further details.

The revision “presumably enables the government to apply the law to crypto-asset exchanges like banks and oblige them to scrutinise whether their clients are Russian sanction targets,” said Saisuke Sakai, senior economist at Mizuho Research and Technologies.

Following the invasion of Ukraine, the Japanese government has slapped asset-freeze sanctions on more than 100 Russian officials, oligarchs, banks and other institutions. Japan has also banned high-tech exports and revoked the most-favoured nation trade status for Russia, which calls its actions in Ukraine a “special military operation”.

Earlier this month, Japan’s financial regulatory body demanded about 30 crypto exchanges in the country not to conduct asset transactions with sanction targets.

A legislative revision is a stronger step to implement such regulations. According to economist Sakai, Kishida’s government probably developed the legal revision plan given Western authorities’ stricter rules on the subject, as well as high Japanese public support for sanctioning Russia.

(Reporting by Kantaro Komiya; Editing by Kenneth Maxwell)

(Reuters) – Bitcoin surged 4.41% to $46,499.29 at 22:07 GMT on Sunday, adding $1,963.64 to its previous close.

Bitcoin, the world’s biggest and best-known cryptocurrency, is up 41.1% from the year’s low of $32,950.72 on Jan. 24.

Ether, the coin linked to the ethereum blockchain network, surged 3.92% to $3,270.67 on Sunday, adding $123.45 to its previous close.

(Reporting by Akriti Sharma in Bengaluru; Editing by Cynthia Osterman)

(Reuters) – U.S. Federal Reserve Governor Christopher Waller said on Friday he is not convinced of the need for a central bank digital currency, particularly for retail customers who already have access to fast payment systems.

“Why do we really need it?” Waller said in a virtual event on central banking and digital currencies. “I haven’t been convinced of that yet. It’s not saying that I can’t be, but I haven’t seen that on a retail CBDC.” He did not make any comments about monetary policy or the outlook for the economy.

(Reporting by Ann Saphir)

By Elizabeth Howcroft and Tom Wilson

LONDON (Reuters) – Ukraine started auctioning off a collection of non-fungible tokens (NFTs) on Friday in an expansion of a cryptocurrency fundraising push that Kyiv says has already collected more than $65 million for its war effort.

The ‘Meta History: Museum of War’ collection is a series of digital images – including silhouettes of warplanes, screengrabs of news reports and a cartoon-style image of an explosion – each one marking a different day in the conflict.

Ukraine’s Ministry of Digital Transformation started appealing for donations in digital tokens such as bitcoin and ether three days after Russia launched its invasion, which Moscow calls a “special military operation”.

The new NFT series was meant “to spread truthful information among the digital community in the world and to collect donations for the support of Ukraine,” according to a message on the collection’s website.

Non-fungible tokens (NFTs) are a type of crypto asset that exploded in popularity last year. They use the technology behind bitcoin to record who owns a digital file from a image to video or piece of text.

Ukraine has so far bought supplies for its military with its crypto donations including bulletproof vests, helmets, lunches and medicines, Ukraine’s deputy minister of digital transformation, Alex Bornyakov, said on Twitter this month.

NFTs are usually bought with cryptocurrencies such as ether. Ukraine’s NFTs will initially cost 0.15 ether, or just over $475. The funds will go directly to Kyiv’s digital crypto wallets, according to the website.

The explosive rise in NFT sales left many observers baffled as to why so much money is spent on items that don’t physically exist.

Still, they have become a popular fundraising tool in recent months, with groups of people pooling their crypto funds to buy NFTs to raise awareness of a particular cause.

(Reporting by Elizabeth Howcroft and Tom Wilson; Editing by Andrew Heavens)

By Chuck Mikolajczak

NEW YORK (Reuters) – The dollar rose for the fourth time in the past five sessions, as economic data on the labor market helped firm expectations the U.S. Federal Reserve will be more aggressive in taking steps to curb inflation.

Weekly initial jobless claims fell to a seasonally adjusted 187,000 last week, the lowest level since September 1969 and below the 212,000 forecast.

While new durable goods orders unexpectedly fell in February as shipments slowed, demand for goods remained strong. In addition a measure of business activity for March climbed to an eight-month high.

The data and recent comments from Federal Reserve officials have strengthened views the central bank will hike rates by more than 25 basis points at its next policy meeting in May. Expectations for a hike of 50 basis points at that meeting are 70.5%, according to CME’s FedWatch Tool https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html?redirect=/trading/interest-rates/fed-funds.html, up from 32.9% a week ago.

“The dollar continues to be like a steamroller here, pretty much running over anyone that takes a short position against it,” said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.

“The data we are seeing certainly supports the case for multiple 50-basis-point hikes this year, and that is pushing up the front end of the curve and leading the dollar to outperformance against virtually every major as well as the commodity-linked currencies, which is something of a surprise.”

Federal Reserve Chair Jerome Powell recently raised the possibility of raising interest rates by more than 25 basis points at upcoming meetings, a more aggressive stance echoed by other policymakers as they attempt to cool rising inflation, which has supported the greenback of late.

On Thursday, Chicago Fed President Charles Evans said he would be comfortable raising rates at every Fed meeting through next March by 25 basis points each time but is “open-minded” about a possible 50-basis-point hike.

Fed Governor Christopher Waller said the state of the U.S. housing market should help shape monetary policy and there seems to be no cooling in sight for higher home costs, although Minneapolis Federal Reserve Bank President Neel Kashkari on Thursday said he has penciled in seven quarter-point interest rate hikes this year and warned against overdoing it.

Morgan Stanley’s chief U.S. economist Ellen Zentner on Thursday said the firm now sees 50-basis point hikes at both the Fed’s May and June meetings, with 25-basis-point hikes at each meeting after through the rest of the year.

The dollar index rose 0.163%, with the euro down 0.06% to $1.0997.

Euro zone business growth was stronger than expected this month, a survey showed on Thursday, although prices rose at a record pace, likely adding to pressure on the European Central Bank to raise rates.

The Japanese yen fell against the U.S. dollar for the fifth session in a row, hitting its lowest since December 2015 at 122.40 with the Bank of Japan expected keep its soft monetary policy in place, in contrast to most other central banks around the globe.

The Japanese yen last weakened 0.92% versus the greenback to 122.27 per dollar, while Britain’s pound was last trading at $1.318, down 0.17% on the day.

The war in Ukraine has served to push up prices of oil and other commodities, adding pressure to already rising inflation.

Western leaders meeting in Brussels on Thursday agreed to strengthen their forces in Eastern Europe, increase military aid to Ukraine and tighten their sanctions on Russia.

Against the Swiss franc, the greenback rose 0.04%, after the Swiss National Bank held its policy rate at -0.75%, going against the grain of other central banks which have started hiking rates to combat inflation.

Norway’s central bank raised its benchmark interest rate on Thursday as expected, and said it now planned to hike at a faster pace than previously intended.

Against the Norwegian crown, the greenback rose 0.03%.

In cryptocurrencies, Bitcoin last rose 3.85% to $44,006.48.

(Reporting by Chuck Mikolajczak; editing by Jonathan Oatis)

By Hannah Lang

WASHINGTON (Reuters) – Prominent U.S. lawmaker Maxine Waters has asked more than 30 financial services trade groups for information on what steps their members have taken to end business relationships in Russia as pressure escalates on companies to cut ties with Moscow.

In a letter sent on Thursday to leading industry groups including the American Bankers Association, Bank Policy Institute, Securities Industry and Financial Markets Association and the U.S. Chamber of Commerce, Waters requested data on which companies remain engaged in business activities in Russia following its invasion of Ukraine and their reason for doing so.

She also asked the groups to detail their members’ processes for complying with Western sanctions. She asked the groups to get the information to the committee within 20 days.

U.S. Representative Waters, the California Democrat who chairs the House Financial Services Committee, did not indicate what the committee might do with this information.

Financial companies have taken varying approaches in response to Russia’s invasion and Waters’ scrutiny is likely to increase pressure on those institutions which have yet to exit.

“Even though multiple companies have voluntarily divested from Russia, the Committee currently lacks a clear picture of the extent of these divestments,” she wrote.

“When the full might of the U.S. economy is applied against countries that commit atrocities, we can bring about real and lasting change.”

U.S. payments firms Visa Inc, Mastercard Inc and PayPal Holdings Inc suspended their operations in Russia earlier this month, a move welcomed by the White House.

Several of Wall Street’s biggest banks, including Citigroup Inc, JPMorgan Chase & Co, and Goldman Sachs Group Inc, have committed to winding down business in Russia, although they are also planning on maintaining a limited presence and are holding on to Russian banking licenses, Reuters reported.

Most cryptocurrency exchanges, meanwhile, have resisted calls to cut off Russian users, raising concerns that digital assets could be used to evade Western sanctions.

(Reporting by Hannah Lang in Washington; Editing by Matthew Lewis)

By Huw Jones and David Milliken

LONDON (Reuters) – The Bank of England on Thursday began sketching out Britain’s first regulatory framework for cryptoassets, saying that although the sector remained small, its rapid growth could pose risks to financial stability in future if left unregulated.

Cryptoassets have come under the regulatory spotlight amid concerns they could be used to circumvent financial sanctions imposed on Russia since its invasion of Ukraine.

“While cryptoassets are unlikely to provide a feasible way to circumvent sanctions at scale currently, the possibility of such behaviour underscores the importance of ensuring innovation in cryptoassets is accompanied by effective public policy frameworks to… maintain broader trust and integrity in the financial system,” the BoE’s Financial Policy Committee (FPC) said in a statement https://www.bankofengland.co.uk/financial-stability-in-focus/2022/march-2022 on Thursday.

Cryptoassets, such as bitcoin and ether, are largely unregulated as they fall outside the regulatory ‘perimeter’ and a change of law would be needed to bring them under the full scope of UK securities rules, a step Britain’s finance ministry is looking at.

“This would likely require the expansion of the role of existing macro and microprudential, conduct, and market integrity regulators, and close co-ordination amongst them,” the FPC said.

The FPC said direct risks to financial stability from crypto were currently limited, but if the recent pace of growth is maintained, there would be risks in future.

The sector globally grew tenfold between early 2020 and November 2021, and now stands at $1.7 trillion or 0.4% of global financial assets, with over 17,000 different cryptoasset tokens in circulation.

Regulation for the sector should be based on “equivalence”, meaning that crypto-related financial services that perform a similar function to existing financial services should be subject to the same laws, the FPC said.

Until cryptoassets are brought fully under the regulatory net, the BoE is focusing on ensuring that risks from crypto are controlled in the banking sector. The Financial Conduct Authority on Thursday told firms they must fully explain to consumers the risks from unregulated crypto.

Regulators across the world are also trying to grapple with cryptoassets and their offshoots.

STABLECOIN CONDITIONS

BoE Deputy Governor Sam Woods wrote https://www.bankofengland.co.uk/prudential-regulation/letter/2022/march/existing-or-planned-exposure-to-cryptoassests to lenders on Thursday, noting increasing interest from banks and investment firms in the sector.

Risks from crypto should be “considered fully” by the boards of banks and they would likely need to adapt their existing risk management strategies and systems, Woods told them.

“We would also expect firms to discuss the proposed prudential treatment of cryptoasset exposures with their supervisors,” Woods said in reference to the amount of capital needed to cover any losses.

The BoE launched a survey of banks’ existing exposures and future crypto plans, setting a June 3 deadline for responses.

Stablecoins, which are backed by assets or cash, that became systemically important would need to be backed by high-quality, liquid assets and loss-absorbing capital similar to that held by banks, the FPC said.

Using deposits with commercial banks to provide backing for stablecoins would pose significant financial stability risks if pursued at scale, the FPC said.

The BoE and the Financial Conduct Authority will carry out further work on rules for stablecoins and consult on a regulatory “model” for systemic stablecoins in 2023, the FPC said. (Graphic: Bank of England Graphic on Stablecoins, https://fingfx.thomsonreuters.com/gfx/mkt/znpneqzdwvl/Bank%20of%20England%20Graphic%20on%20Stablecoins.PNG)

(Reporting by Huw Jones and David Milliken; Editing by Toby Chopra)

By Tom Wilson

LONDON (Reuters) – Decentralised finance – or DeFi – is throwing up new risks for investors as it evolves to mirror traditional markets, a global body for securities regulators said on Thursday, adding to a chorus of warnings about the fast-growing crypto offshoot.

So-called DeFi platforms allow users to lend, borrow and save in digital assets, bypassing the traditional gatekeepers of finance such as banks and exchanges.

Backers say they open up financial services for swathes of consumers and businesses that otherwise struggle to access loans or other products. The DeFi sites became popular during the COVID-19 pandemic, as rock-bottom interest rates pushed investors to search for yield.

Most DeFi services replicate more traditional financial services and activities, but with weaker regulation and increased risks for investors, IOSCO, made up of securities regulators from the United States, Europe and Asia, said in a report.

IOSCO highlighted risks surrounding DeFi, including lack of disclosure of products and systems, patchy reliability of the DeFi sites and potential problems in operating at scale.

DeFi sites claim to be “decentralised” with no single entity exerting control, but IOSCO said professional investors or venture capitalists often have a strong say on governance or retain ultimate control.

In addition, centralised trading platforms that offer DeFi services, such as trading, lending and borrowing, may also have potential conflicts of interest, IOSCO said, without giving further details.

The value of crypto on DeFi platforms hit a record of more than $111 billion in November, mirroring record highs for bitcoin, and now stands at around $80 billion, based on data site DeFi Pulse.

Regulation of DeFi, like cryptocurrencies in general, remains patchy, even though the sector is attracting more mainstream investors. DeFi has also been used for scams and other crimes.

The Financial Stability Board, a risk monitoring watchdog for the G20 economies, said last month DeFi could present risks to financial stability without regulation and oversight.

(Reporting by Tom Wilson. Editing by Jane Merriman)

NEW YORK (Reuters) – BlackRock Inc’s chief executive, Larry Fink, said on Thursday that the Russia-Ukraine war could end up accelerating digital currencies as a tool to settle international transactions, as the conflict upends the globalization drive of the last three decades.

In a letter to the shareholders of the world’s largest asset manager, Fink said the war will push countries to reassess currency dependencies, and that BlackRock was studying digital currencies and stablecoins due to increased client interest.

“A global digital payment system, thoughtfully designed, can enhance the settlement of international transactions while reducing the risk of money laundering and corruption”, he said.

That appeared to strike a different tone from May of last year, when Fink raised some concerns around volatility and said it was too early to determine whether cryptocurrencies were just a speculative trading tool.

In the letter on Thursday, the chairman and CEO of the $10 trillion asset manager said the Russia-Ukraine crisis had put an end to the globalization forces at work over the past 30 years.

Access to global capital markets was a “privilege, not a right,” he said, adding BlackRock had suspended the purchase of any Russian securities in its active index portfolios following Moscow’s invasion of Ukraine.

“Over the past few weeks, I’ve spoken to countless stakeholders, including our clients and employees, who are all looking to understand what could be done to prevent capital from being deployed to Russia. We believe this is the definition of our fiduciary duty,” Fink said.

BlackRock Inc’s total client exposure to Russia had declined to less than $1 billion earlier this month from $18 billion before Moscow’s invasion of Ukraine led to Western sanctions and the closure of the Russian stock market, according to figures supplied by the asset manager this month.

Russia calls its actions in Ukraine a “special operation.”

The conflict’s impact on global supply chains – already hammered over the past two years because of the coronavirus crisis – is expected to contribute to inflationary pressures that are pushing global central banks to tighten monetary policies and reverse COVID-19-driven accommodative measures.

“While companies’ and consumers’ balance sheets are strong today, giving them more of a cushion to weather these difficulties, a large-scale reorientation of supply chains will inherently be inflationary,” said Fink.

He said central banks were dealing with a dilemma they had not faced in decades, having to choose between living with high inflation or slowing economic activity to contain price pressures.

Energy prices have jumped as sanctions on Moscow prompted companies and countries to reassess supply chains and to try to reduce dependence on Russian commodities.

“Energy security has joined the energy transition as a top global priority,” Fink said.

(Reporting by Davide Barbuscia in New York; Editing by Matthew Lewis)

(Reuters) – Australia and New Zealand Banking Group said on Thursday it carried out an Australian dollar stablecoin payment, in a landmark transaction to become the first Australian lender to mint a digital asset linked to the country’s currency.

A stablecoin is a kind of digital asset that is devised to keep its value stable in relation to another asset, and are frequently used as a portal to other cryptocurrencies or to generate income in decentralised financial systems.

ANZ said it has delivered the Australian dollar stablecoin, which it calls A$DC, to a private wealth management firm for digital assets – Victor Smorgon Group – through digital asset investment platform Zerocap.

The company’s move to mint digital assets linked to the Australian dollar comes after the Reserve Bank of Australia (RBA) said last year the growth of digital wallets could allow the exchange of tokens or digital forms of money that could be backed by the RBA, even as the central bank remains sceptical of the digital currency.

ANZ, the country’s number three lender, said it has minted 30 million of A$DC using a smart contract and the coins were transferred between the parties and later redeemed back into Fiat currency.

(Reporting by Riya Sharma; Editing by Sherry Jacob-Phillips)

By Chuck Mikolajczak

NEW YORK (Reuters) – The dollar climbed on Wednesday while the euro weakened as oil prices shot higher again with U.S. President Joe Biden poised to announce, alongside European leaders, new sanctions against Russia during his trip to Europe.

Biden is due to arrive in Brussels later on Wednesday on his first foreign trip since the war in Ukraine began, and will meet NATO and European leaders in an emergency summit at the Western military alliance’s headquarters. Sources said the U.S. package would include measures targeting Russian members of parliament.

Prices for commodities such as oil and wheat have climbed as tensions in Ukraine have escalated, putting additional upward pressure on already high inflation due to supply chain bottlenecks. Rising inflation has led many central banks, including the U.S. Federal Reserve, to take measures to rein in prices, such as by raising interest rates.

“The capital flow is going to be I don’t want to be in Europe, it is closer to Ukraine literally in the geographical sense, but also it is the fallout from the sanctions, there is a lot of money rotating back out of Europe and back towards the States,” said Huw Roberts, head of analytics at Quant Insight.

“If we get another round of sanctions, then people therefore say the blowback on the West is going to fall on Europe disproportionately.”

The dollar index rose 0.097%, with the euro down 0.17% to $1.1008.

Crude prices were up more than 5% on Wednesday, supported by disruption to Russian and Kazakh crude exports.

The Russian rouble strengthened 8.65% versus the greenback at 89.50 per dollar after hitting a one-month high of 87.50 after Russian President Vladimir Putin said Russia will seek payment in roubles for gas sales from “unfriendly” countries.

Federal Reserve Chair Jerome Powell raised the possibility of raising interest rates by more than 25 basis points at upcoming meetings, a more aggressive stance echoed by other policymakers, which has supported the greenback and helped boost the yield on the benchmark 10-year U.S. Treasury note to more than 2.4%.

On Wednesday, San Francisco Fed President Mary Daly and Cleveland Fed President Loretta Mester became the latest Fed policymakers to indicate a bigger hike was in the offing at the central bank’s May meeting.

Jefferies on Wednesday updated its Fed forecast in light of Powell’s comments and now sees a 50-basis-point rate hike at both the May and June meetings, followed by 25-basis-point hikes at the remaining meetings of 2022.

The Japanese yen weakened 0.30% to 121.12 per dollar, while the British pound was last trading at $1.3207, down 0.42% on the day after earlier hitting a three-week high of $1.3298.

Inflation in Britain shot up faster than expected last month to hit a new 30-year high at a 6.2% year-over-year rise. British finance minister Rishi Sunak cut taxes for workers and reduced a duty on fuel on the heels of the inflation data as he sought to soften a severe cost-of-living squeeze against the backdrop of fast-rising prices and slowing economic growth.

The yen has been weak against the dollar recently, with the currency slipping to a new six-year low of 121.40 per dollar as the path of their respective central banks has diverged. Bank of Japan Governor Haruhiko Kuroda said on Tuesday the central bank must maintain ultra-loose monetary policy as recent cost-push inflation could hurt the economy.

In cryptocurrency markets, Bitcoin last fell 0.98% to $42,179.99.

Ethereum last fell 1.32% to $2,962.69.

(Reporting by Chuck Mikolajczak; Editing by Bernadette Baum and Jonathan Oatis)

BANGKOK (Reuters) – Thailand has issued rules to ban digital assets from being used to pay for goods and services from April 1, the market regulator said on Wednesday.

The move was in line with earlier discussions between the Securities and Exchange Commission (SEC) and the Bank of Thailand (BOT) on a need to regulate such activity by digital asset business operators as it could impact the country’s financial stability and overall economy, the SEC said in a statement.

Digital asset business operators that provide such services must comply with the new rules within 30 days from the effective date, it said.

The BOT has said repeatedly that it does not support cryptocurrencies as payments. It will hold a briefing on regulatory guidelines for banks’ digital asset business later on Wednesday.

In January, the regulator in Indonesia also warned financial firms not to offer and facilitate crypto sales, amid a boom in its usage.

(Reporting by Orathai Sriring; Editing by Kanupriya Kapoor)

By Nelson Renteria

SAN SALVADOR (Reuters) – El Salvador postponed an unprecedented issue of a bitcoin-backed bond planned for last week, as the government decided to wait for favorable conditions in the financial market, Finance Minister Alejandro Zelaya said on Tuesday.

The Central American government had scheduled the launch of the $1 billion bond between 15-20 March, but the war between Russia and Ukraine and volatility of the cryptocurrency prompted authorities to change the date.

The launch could be postponed until September as bitcoin has swooned since hitting a record high above $67,500 in early November. It lost almost half its value by Jan. 22, and traded at $42,609 on Tuesday, according to Refinitiv Eikon data.

Now is not the time to issue the bond, according to Zelaya who said that the ideal date to go on the market is the first half of the year, during an interview with a local television channel.

“In May or June the market variants are a little different. At the latest in September. After September, if you go out to the international market, it is difficult (to raise capital),” he added

El Salvador became the first country in the world to adopt bitcoin as legal tender last year, generating criticism from the International Monetary Fund (IMF), which worries the measure could hurt the country’s finances.

(Reporting by Nelson Renteria; Writing by Valentine Hilaire; Editing by Drazen Jorgic and David Gregorio)

By Chuck Mikolajczak

NEW YORK (Reuters) – The dollar edged lower on Tuesday as a boost from comments by U.S. Federal Reserve Chair Jerome Powell that boosted the greenback on the previous day faded and a rise in equities markets help boost risk-on sentiment.

The greenback saw its biggest one-day percentage gain since March 10 on Monday, as Powell opened the door for raising interest rates by more than 25 basis points at upcoming policy meetings in order to combat inflation.

On Tuesday, St. Louis Fed President James Bullard repeated his call for the Fed to move aggressively on Bloomberg TV. San Francisco Fed President Mary Daly said she believes the main risk to the economy is a worsening of already high inflation as oil prices climb due to the conflict in Ukraine and a disruption in supply chains from China’s COVID-19 countermeasures.

Traders are pricing in a 61.6% chance of a 50-basis-point hike at the Fed’s May meeting, according to CME’s FedWatch Tool, up from slightly more than 50% a week ago.

In the wake of Powell’s comments, Goldman Sachs now anticipates the central bank will raise interest rates by 50 basis points at both its May and June meetings.

Investors were in a risk-on mood, as U.S. stocks rose and dented some of the safe-haven appeal of the greenback, with equities getting a lift, in part, from bank shares on Fed rate hike expectations.

“For the dollar, it is well supported by the Fed’s increasingly hawkish rate stance but it is off its peaks, risk-appetite has something to do with that, with stocks higher that is kind of tempering the dollar’s gains,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

“At least for now, it seems the market is giving the Fed the benefit of the doubt that it can foster a soft landing and that is what is underpinning risk appetite and capping gains in the dollar.”

The dollar index fell 0.06%.

The yen continued its recent weakness as the Bank of Japan renewed its stance on keeping its ultra-loose monetary policy intact.

The yen hit a fresh six-year low of 121.03 and last weakened 1.05% versus the greenback at 120.72 per dollar.

The yen also suffered against other currencies, with the euro hitting a five-month high of 133.33 and was last up 1.2% to $133.17. The Japanese currency slumped to a more than 6-1/2-year low against the Swiss franc at 128.91, with the franc last up 1.48% to $128.89.

The euro was up 0.13% to $1.1028. The single currency has weakened over the past month as the conflict in Ukraine has escalated, leading to an increase in energy prices. On Monday, European Central Bank President Christine Lagarde said the Fed and ECB will move out of sync, as the war in Ukraine has very different impacts on their respective economies.

But ECB policymaker Francois Villeroy de Galhau said on Tuesday the central bank needs to look beyond short-term swings in energy prices and focus on underlying inflation trends.

Sterling was last trading at $1.326, up 0.72% on the day.

In cryptocurrencies, Bitcoin last rose 3.67% to $42,662.37.

Ethereum last rose 3.59% to $3,014.26.

(Reporting by Chuck Mikolajczak; Editing by Marguerita Choy and Jonathan Oatis)