Venezuela is set to launch a digital Bolivar in the next few months, joining a growing list of countries issuing CBDCs.
Despite the colossal failure with the state-owned cryptocurrency launched in 2018, the government believes that the digital Bolivar will tame inflation and institute monetary sovereignty.
In the last few days, the Central Bank of Venezuela has confirmed that it will be launching the digital bolivar this October. The digital currency was first announced in February. Venezuela is one of many countries that has been exploring central bank digital currency (CBDC). Simply, a digital form of the traditional currency.
Issued by the government and centralized, it differs from cryptocurrencies such as Bitcoin which is both limited and decentralized.
This is not the first time that the government of Venezuela has dabbled with digital forms of payments. Primarily driven by Venezuelan President Nicolás Maduro, in 2018, the government launched a cryptocurrency dubbed Petro (PTR). This made it the first-ever state-sponsored cryptocurrency. The token was backed by the country’s oil reserves and other mineral reserves. However, to every extent, the project has been a massive failure. Economists and commentators have defined the project as a ‘scam, fraud and a horrible investment.’
In a second, more conventional attempt, the Central Bank of Venezuela has confirmed on its Twitter account that the digital Bolivar will enter circulation on October 01.
With it, the government expects to get a handle on the rampant inflation that has plagued the nation’s economy. It is expected that the currency will lead to a monetary redenomination that eliminates six zeros. During the launch of the Petro, the government eliminated five zeros. In the last 15 years, there has been a total of three monetary redenominations.
Can Venezuela get it right this time?
Through a CBDC, the government hopes to initiate new monetary policies to curb hyperinflation. The denomination is likely to have little to no effect. However, in its attempt to implement new policies and ensure transparency in the government’s financial system, there could be some radical changes that promote independence. The bank noted;
…a free and sovereign system, made in Venezuela and by Venezuelans, promoting the independence from foreign systems for national banking operations.
Unlike the state-backed Petro, the CBDC is straightforward. Although it is unlikely to solve the corrupt government policies that have sunk the economy, this could be a step in the right direction that could mitigate the effects and curb future financial failures.
Central Bank of Spain requires cryptocurrency companies to register in the country
The Bank of Spain (BDE) made available on Thursday (21) an electronic form for registering individuals and companies wishing to initiate or formalize operations with cryptocurrencies. The call comes a week after the agency formally sent a notice on the subject to the country’s financial institutions.
According to the BDE, registration is mandatory for companies operating in the cryptocurrency sector, regardless of whether they already have registration with the country’s central financial agency, that is, even banks. Such a requirement could confuse financial entities already licensed in Spain, as they are already directly supervised, Coindesk commented.
“The obligation to register in this form applies to all individuals or legal entities that provide exchange services between virtual and fiduciary currency and custody, regardless of whether they are also registered in other administrative records at the Bank of Spain or other competent authorities”, says a short excerpt from the BDE instructions.
Another point is what clarifies the BDE about the registration of individuals who work in the exchange service in Spain, such as P2Ps. Something that the central bank makes clear is that these actors must register “regardless of the location of the service recipients”. However, both individuals and corporations will have to adapt or revise their money laundering policy.
Entities now have one week to start the registration process and deliver documentation. The BDE advises that “it is advisable to submit all documents complete from the start to avoid delays in processing the order”.
Cryptocurrencies in Spain
About four months ago, the BDE said it would provide instructions and the necessary forms to apply for registration. But the instructions have only just arrived, with just 7 days to go before the registration deadline.
Another point of action by the BDE is the lack of clarity, since the entity works as the country’s central bank, but under the supervision of the European Central Bank (ECB).
The Spanish bank BBVA, for example, already has a bitcoin trading and custody service in Switzerland. CaixaBank, the third largest Spanish bank, is also preparing to explore the cryptocurrency sector with startup Onyze.
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.