- Germany has passed a new law that exposes over 4,000 institutions to cryptocurrencies.
- As one of the most affluent and crypto-friendly countries in the world, the move could spark a massive crypto adoption campaign.
The year 2021 has seen a major turnaround in the adoption of cryptocurrencies by institutions. After years of dismissing the market as a fad that will fade away, institutions are beginning to embrace crypto. With them, governments have also taken an interest and are beginning to establish clear regulatory guidelines. In Germany, the government has passed a new law that allows thousands of institutions to invest in cryptocurrencies.
Over 4,000 institutional investment funds and wealth managers will be allowed to invests as much as 20 percent in cryptocurrencies with the new law that comes into effect on July 01. The legislation has since sparked excitement in the crypto community. Germany is one of the most affluent countries not only in Europe but in the world, with institutions cleared to invest in crypto, this could spark one of the largest crypto adoption campaigns. Institutions are regarded as key players in the market for their heavy purchase and ability to weather out the volatility that characterizes the crypto market. Furthermore, this could set Germany as a financial investment hub.
In an interview, German parliamentarian Frank Schäffler applauded the move noting;
The addition of crypto assets in Spezialfonds is an important step for their acceptance. Here, the law is going in the right direction, and we expressly welcome it
Last week, the German financial watchdog, Financial Supervisory Authority (BaFin) issued Coinbase a crypto custody licence. In a press release, BaFin confirmed that Coinbase is the first company to receive the license. Germany passed a law requiring crypto firms to apply for a crypto custody licence in late November with Coinbase applying in the late spring of 2020. BaFin has confirmed that there are applications in “advanced stages” and their approval will be confirmed in the coming months.
Germany leads in Europe
Across the border, the U.K has also taken a more hands-on approach to cryptocurrencies in the last few months. The Financial Conduct Authority (FCA) which has been mandated to overlook crypto firms has in recent weeks cracked down on the space going as far as banning one of the largest crypto exchanges, Binance. The FCA ruled that Binance can’t conduct any regulated activity in the U.K. The agency has further revealed that in recent weeks, around 64 crypto firms have withdrawn their applications with the agency.
With the U.K taking a harsh stance and little been done by other European countries in terms of regulations, Germany looks poised to become the financial investment hub of the continent.
This Is What Jack Dorsey’s Cryptic ‘705742’ Tweet Might Mean
A simple but cryptic tweet from Jack Dorsey, Founder and CEO of Twitter and payments firm Square, has sparked a debate about the meaning of the post, and whether the well-known Bitcoin (BTC) advocate has any BTC-related plans that have yet to be announced.
As pointed out by many users replying to the thread, the tweet, saying just “705742,” likely refers to a block number on the Bitcoin blockchain. A block with that number was indeed mined on Tuesday at 20:14 UTC, but it is still unknown what else is special about the particular block.
Been updating block explorer for the last 7 minutes— Katie The Russian (@KatieTheRussian) October 19, 2021
Twitter users were quick to pull up the bitcoin block explorer to see if there was anything unusual about block 705742, which at that point had yet to be mined. However, little out of the ordinary could be found.
Others, meanwhile, joked that the number could be Dorsey’s “[end of year] price target for bitcoin,” or that it could be somehow related to “Moscow time,” – bitcoin slang for the value of 1 USD in satoshis.
Speculating further, one user on Reddit suggested that the block number could be the first block to be mined by a new mining system that Dorsey has proposed.
“Maybe the first block that Square mined as part of their [research & development] for a potential public mining platform,” the user wrote, before adding that it looks like the wallet that received the block reward already has both in and outbound transactions worth almost USD 2bn. “Seems like a plausible volume for Square/Cashapp,” the user added.
However, according to various Bitcoin blockchain explorers, the block in question included 2,787 transactions and was actually mined by the BTC.com pool. Moreover, the block was mined almost an hour after the tweet was published.
In either case, as reported, the latest tweet from the Twitter CEO followed another thread from last Friday, where Dorsey said that Square is considering building “a bitcoin mining system based on custom silicon and open source.”
“Mining needs to be more distributed” and it “should be as easy as plugging a rig into a power source,” Dorsey wrote, asking his followers what the biggest barriers are for people who want to run miners.
Facebook Finally Launches Digital Currency Wallet Novi but Senators Want to Close This Project
Amid the Facebook Novi launch, some federal legislators want the social media giant to discontinue the project.
Facebook Inc (NASDAQ: FB) has launched the pilot phase of its digital currency wallet Novi in the US and Guatemala using stablecoin Paxos. Facebook finally launches Novi and is going with Paxos’ USDP after its own native crypto Diem failed to secure regulatory approval. Furthermore, the social media giant heralded the pilot launch in a blog post on Tuesday.
Novi’s pilot launch is more than two years after it was first announced. The wallet will facilitate fast, secure, and free fund transfers between users via mobile smartphone apps. However, all users must register with government-issued identification.
For now, Paxos’ stablecoin will serve as Novi’s transactional currency, while powerhouse exchange Coinbase will provide custodial services. According to David Marcus, head of Facebook’s Novi wallet, this pilot phase will, “test core feature functions, and operational capabilities in customer care and compliance.” Furthermore, it will test the viability of stablecoins as a valid and sustainable form of payment.
Facebook Launches Novi to the Disapproval of US Congress
Amid the Facebook Novi launch, some federal legislators are calling for the social media giant to discontinue the project. Senate Democrats addressed a letter to Facebook CEO Mark Zuckerberg on Tuesday questioning the company’s credibility with crypto. In their own words, Facebook “cannot be trusted to manage cryptocurrency”. The senators base this conviction on the social media company’s past inadequacies in handling cyber risks and keeping consumers protected. Signed by Senators Brian Schatz, Sherrod Brown, Elizabeth Warren, and others, the letter read:
“Facebook is once again pursuing digital currency plans on an aggressive timeline and has already launched a pilot for a payments infrastructure network, even though these plans are incompatible with the actual financial regulatory landscape — not only for Diem specifically, but also for stablecoins in general.”
Part of the Congress letter to Facebook further states:
“We urge you to immediately discontinue your Novi pilot and to commit that you will not bring Diem to market.”
Facebook responded to the Senators’ query through a spokesperson for Novi, suggesting that the company would address the issues raised therein.
Facebook Has a Long-Running History with Federal Lawmakers over Its Operational Practices
In recent times, Zuckerberg and Facebook have locked horns more frequently with Congress. Back in 2019, Congress summoned the Facebook CEO to provide testimony on the Diem project (then called Libra). Zuckerberg’s summoning was the culmination of weeks of tussling, between Facebook and the federal lawmakers, who were skeptical of the project. In addition, the Zuckerberg hearing came just a year after Facebook’s Cambridge Analytica scandal. This may have been another reason federal legislators were agitated against the company.
Another recent red flag raised against Facebook was earlier this month from whistleblower Frances Haugen. Haugen appeared before the Senate Commerce Committee to testify on the threat Facebook posed to users. Some of these include the usage of Facebook itself and other affiliated services, such as photo and video-sharing behemoth Instagram.
Australian Parliamentary Committee Sets Guidelines to Give Crypto Industry a Big Push
Australia’s parliamentary committee on crypto-assets aims to bring concrete regulatory and policy changes to give a major push to the crypto industry in the country. The committee believes Australia needs a robust policy and regulatory changes to help it compete against the global leaders. The said committee released a draft report on 20th October outlining the need for encouraging investors and ensuring protection against frauds.
Some of the key recommendations in the draft report include,
- Establishing a market licensing regime for Digital Currency Exchanges, including capital adequacy, auditing, and responsible person tests under the Treasury portfolio
- Establishing a custody or depository regime for digital assets with minimum standards under the Treasury portfolio
- Conducting a token mapping exercise to determine the best way to characterize the various types of digital asset tokens in Australia
Andrew Bragg, a senator from the conservative Liberal Party and chair of the committee said that the recommendations in the draft would help Australia set a new regulatory framework for the highly popular crypto industry which will, in turn, help Australia compete against the likes of Singapore and UK. He said,
“The draft recommendations are a big push to detail a cryptocurrency framework for Australia, which would allow us to compete with the U.K. and Singapore,”
Crypto Market Has Become Too Big to Ignore
The Crypto market was primarily seen as a speculative ecosystem for the most past of its life, but that perception has changed quite fast over the past year. Governments have now realized that the crypto market has become too big to ignore as a fad. This is why the likes of El Salvador have made Bitcoin a legal tender, while Paraguay passed a law to legalize the use of Bitcoin and Ethereum in the financial market.
The United States’s policymakers who were adamant about keeping the crypto market at bay have finally approved the first-ever Bitcoin Futures ETF. This shows how the sentiment around the crypto market has changed as it became a $2.5 trillion industry again in October.