Welcome to Latam Insights, a compendium of Latin America’s most relevant crypto and economic news during the last week. In this issue: Bitcoin hinders El Salvador’s credit talks with the IMF, the Paraguayan Senate issues a statement supporting bitcoin miners, and Venezuela unveils a crypto-linked corruption scheme. Bitcoin Reportedly Hurts El Salvador Credit Opportunities With […]
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Bitcoin Reportedly Hindering El Salvador’s Credit Opportunities With the IMF
Bitcoin and its adoption by the government of El Salvador have become a negative factor in the country’s negotiations with the IMF. According to reports, the institution demands changes to El Salvador’s Bitcoin law to receive a .4 billion credit line for expediting public debt payments and other obligations. El Salvador’s Bitcoin Allegiance Is Getting […]
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Deltec Bank Accused of Secretly Extending a $2 Billion Credit Line to Alameda Research
Deltec Bank and Trust Ltd, based in The Bahamas, stands accused of covertly extending a billion line of credit to Alameda Research. A lawsuit, filed by those who claim to be victims of Sam Bankman-Fried, accused Deltec of granting a three-day grace period to Alameda Research for the settlement of purchased stablecoins. Misappropriation of […]
Bitcoin News
South Korea Proposes Ban on Credit Card Crypto Purchases
Amidst a national surge in crypto trading, South Korea’s FSC is proposing a significant change to their credit finance laws, potentially barring citizens from the use of credit cards in cryptocurrency transactions.
South Korea Aims to Tighten Crypto Regulations with Proposed Credit Card Ban
The South Korean Financial Services Commission (FSC) is considering an amendment to its credit finance act that would ban the use of credit cards to purchase cryptocurrencies. The Jan. 3 post on the FSC website states that this move is aimed at curbing the illegal outflow of domestic funds and speculative activities associated with buying crypto on foreign exchanges. The proposed change seeks to align the treatment of virtual assets with other prohibited payment methods, addressing concerns about money laundering and the encouragement of speculative behavior.
The FSC’s initiative comes as part of a broader effort to tighten regulations on the local cryptocurrency market, which has been under increased scrutiny. At the same time, South Korea is experiencing a surge in crypto, with two Korean exchanges Upbit and Bithumb contributing over 10% to the global trading volumes. While domestic exchanges in South Korea are subjected to strict rules requiring transaction authentication and partnerships with local banks, foreign exchanges do not face the same level of regulation. The proposal, open for public feedback until February 13, 2024, aims to reduce risks and enhance the transparency and security of crypto transactions.
If passed, the amendment would prevent South Korean citizens from using credit cards to buy cryptocurrencies, effectively limiting their access to virtual assets via foreign platforms. It is possible this is connected with findings from recently introduced tax regulation that, in September 2023, revealed South Koreans held over billion worth of crypto holdings in overseas accounts for the year.
This proposal is indicative of the growing global trend of regulatory bodies seeking to establish a more controlled and secure cryptocurrency environment, reflecting the heightened attention crypto continues to accrue. The decision is expected to be reviewed and potentially implemented in the first half of 2024.
Would banning crypto purchases from credit cards substantively impact most people’s ability to acquire crypto? Share your thoughts and opinions about this subject in the comments section below.
Sam Altman-Backed Crypto Startup Looks To Secure $100 Million For Bitcoin Private Credit Fund
Meanwhile Advisors, a crypto startup backed by the American entrepreneur Sam Altman, has announced plans to raise 0 million for a Bitcoin (BTC) private credit fund.
The fund, known as Meanwhile Private Credit Fund aims to provide institutional investors with access to BTC while targeting an additional 5% yield denominated in the cryptocurrency.
Bitcoin Rally Sparks Launch Of Meanwhile Advisors Fund
According to a report by The Block, Meanwhile Advisors has launched the fund as Bitcoin continues its recent rally, with prices currently falling from the ,000 level down to the ,200 mark.
Zac Townsend, the co-founder and CEO of Meanwhile Group, stated that the belief is that Bitcoin will appreciate significantly in the future, and the fund offers investors a unique opportunity to increase their exposure to digital assets.
The Meanwhile BTC Private Credit Fund adopts a single-close, closed-end structure. Participating limited partners (LPs) will contribute US dollars to the fund, which will be immediately converted to Bitcoin following the single close.
Meanwhile will lend this BTC to borrowers to generate the targeted 5% return in Bitcoin. This structure allows LPs to accumulate more Bitcoin if its price appreciates during the fund’s lifecycle without requiring additional principal investment.
Townsend mentioned that the minimum investment amount per LP is 0,000, with no maximum limit. The fund’s investment period spans three years, followed by a four-year harvest period, resulting in a total term of seven years.
However, capital is returned to investors during harvest, meaning a significant portion of the invested capital may be returned well before the seven-year mark.
Innovative Fee Approach?
Per the report, the Meanwhile BTC Private Credit Fund charges a 2% management fee and a 20% carried interest fee, both in Bitcoin. The carried interest fee only applies when the LP’s Bitcoin holdings are increased.
This fee structure ensures that if Bitcoin experiences substantial price appreciation, Meanwhile does not benefit from the price appreciation itself but rather from generating more Bitcoin for the LPs.
Addressing concerns about risk management, Townsend highlighted that the closed structure of the fund eliminates the risk of a “bank run” scenario that can lead to insolvency. Moreover, the fund focuses on making conservative loans to “creditworthy institutional borrowers”, mitigating risks associated with lending to retail investors at higher rates.
The Block also reported that Anchorage Digital serves as the fund’s custodian. Meanwhile Group’s insurance unit has previously launched a Bitcoin-denominated life insurance policy, and Townsend mentioned plans to introduce an accidental death coverage policy in Bitcoin as well.
When writing, the leading cryptocurrency in the market is trading at ,200, marking a decrease of nearly 2% within the last 24 hours. This decline follows an unsuccessful attempt to solidify its position above the significant ,000 milestone.
Nevertheless, Bitcoin has managed to maintain a 14% increase over the past seven days and is currently holding strong at the support level of ,000, as it sets its sights on achieving a new annual peak.
Featured image from iStock, chart from TradingView.com
Moody’s Downgrades US Credit Rating to ‘Negative’ on Fiscal Deficits and Debt Concerns
The credit agency Moody’s has revised the United States credit outlook to “negative” from “stable” due to concerns over persistent large fiscal deficits and diminishing debt affordability. The announcement follows a previous downgrade by Fitch and reflects ongoing apprehension among investors about federal spending and political discord.
Moody’s Marks U.S. Credit Negative; Biden Administration Challenges View
Moody’s decision on Friday to alter the U.S. credit outlook has come at a time of heightened fiscal scrutiny, as national debt levels rise and political disagreements hinder consensus on budgetary management. As the nation grapples with these fiscal challenges, Moody’s remarks echo investor concerns about the direction of U.S. economic policy and the potential for legislative stalemate over budget and deficit strategies.
“Any type of significant policy response that we might be able to see to this declining fiscal strength probably wouldn’t happen until 2025 because of the reality of the political calendar next year,” Moody’s senior vice president William Foster told Reuters during an interview.
The Biden administration is challenging Moody’s revised outlook, highlighting the alleged strength of the U.S. economy and the government’s dedication to enduring fiscal health. The reverberations of this Moody’s assessment ripple into the political sphere, ramping up the scrutiny on Biden’s team as they pilot through a convoluted fiscal environment. Recent polls show former President Donald Trump ahead of President Joe Biden in various crucial swing states.
Moody’s credit assessment trails closely behind a hawkish speech by Fed Chairman Jerome Powell in Washington, where he conveyed doubts about the adequacy of the Federal Reserve’s policy actions. Deputy Treasury Secretary Wally Adeyemo said the Treasury Department disagrees with Moody’s latest revision.
“While the statement by Moody’s maintains the United States’ Aaa rating, we disagree with the shift to a negative outlook. The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset,” Adeyemo said.
Nevertheless, despite Adeyemo’s remarks, the government’s latest 30-year Treasury auction on Thursday fared badly, with investors describing the bid-to-cover ratio and the yield concession as pathetic. White House spokeswoman Karine Jean-Pierre stressed that Moody’s downgrade is the fault of Republicans. The negative rating she said was “yet another consequence of congressional Republican extremism and dysfunction.”
What do you think about the credit agency Moody’s downgrading the U.S. credit score to negative? Share your thoughts and opinions about this subject in the comments section below.
Nexo Mastercard Adds Credit and Debit Toggle to Optimize Crypto Usage
Nexo has introduced a new “Dual Mode” feature on its cryptocurrency Mastercard, allowing users to switch between debit and credit functions to optimize cryptocurrency spending.
Nexo Unveils Dual Mode Card Capabilities to Streamline Crypto Payments
Nexo‘s new feature enables real-time toggling between modes within the Nexo app, providing flexibility based on users’ budgets and purchase needs, according to the company’s announcement on Thursday. Nexo said the newly launched service enhances the capabilities of its cryptocurrency card.
“The Nexo Card embodies the pinnacle of customer-centric innovation, cultivated from user-driven needs that Nexo has been diligently addressing over the years,” Nexo co-founder and managing partner Antoni Trenchev told Bitcoin.com News. “By bringing the pioneering Nexo Card with the Dual Mode capability to market, Nexo has further strengthened its position as a leading innovator in the crypto space,” Trenchev added.
First introduced in 2022, the Nexo card was developed with Mastercard and Dipocket. With Dual Mode, the Mastercard offers different functions based on the user’s needs, according to Nexo. The company’s announcement further details that users can earn interest on their balance and make free ATM withdrawals up to €10,000 per month.
Crypto debit cards first emerged around 2016, with early providers like Wirex and Bitpay issuing Visa and Mastercard-brand products. Their popularity has grown as cryptocurrencies have become more mainstream. Over the years, these cards have provided a convenient way to utilize crypto for daily purchases without having to cash out.
What do you think about Nexo’s Dual Mode feature? Share your thoughts and opinions about this subject in the comments section below.
Australia-Based Crypto Lender Sentenced for False Credit License Claims
The Australian securities regulator recently revealed that the crypto lending platform Helio pleaded guilty to the allegation of falsely claiming to be a holder of the Australian Credit License (ACL). For admitting to committing the offense, Helio is said to have entered a “recognisance” of ,560 (AUD15,000) for 12 months which is contingent on the crypto lender’s good behavior.
Helio Said to Be in Breach of Australian Consumer Protection Law
The Australian Securities and Investments Commission (ASIC) announced on Aug. 17 that the Melbourne-based cryptocurrency lender Helio Lending has been sentenced for falsely claiming it held a credit license. According to the regulator, such a claim is in breach of section 30 of Australia’s National Consumer Credit Protection Act 2009.
In a statement, the Aussie securities regulator revealed that the license claim was made in an article that appeared on Helio’s website in Aug. 2019. The regulator argued that Helio portrayed itself as a licensed entity when it knew full well that it was not a holder of the Australian Credit License (ACL).
Commenting on her organization’s punishment of Helio, ASIC Deputy Chair Sarah Court said:
We expect entities and individuals to provide accurate information to their customers and potential customers. Helio falsely claimed that it held an Australian Credit Licence (ACL), misleading their customers to believe that they had the protections afforded by such a licence.
For admitting to committing the offense, Helio is said to have entered a “recognisance” of ,560 (AUD15,000) for 12 months which is contingent on the crypto lender’s good behavior. However, the regulator said the second charge relating to the content seen on Helio’s website has since been withdrawn.
What are your thoughts on this story? Let us know what you think in the comments section below.
LBank Launches Global First Unlimited Crypto Credit Card, Breaking Boundaries in Cryptocurrency Payments
PRESS RELEASE. LBank, the world-leading cryptocurrency exchange, is soon to launch the world’s first unlimited cryptocurrency credit card, aiming to break down the barriers of cryptocurrency payments. The card, available in both virtual and physical forms, allows users to make any consumer payments directly with cryptocurrency through LBank’s credit, and also supports local cash withdrawals.
LBank’s nearly 9 million users are expected to begin using this card in Q3 2023, and the exchange’s VIP users will be granted the exclusive right to early access. The credit card will connect to LBank users’ digital assets and can be used on various payment platforms like Google Pay. Upon acquiring the card, the app allows detailed viewing of each recharge and consumption record, enabling users to stay on top of their financial status at all times.
By using this card, LBank users can consume their assets within the exchange or withdraw assets in the form of fiat currency. The card does not have the quota limitations of ordinary credit cards; both consumption and withdrawals are unlimited. LBank’s technical team indicated that more detailed information about payment options, such as fee tiers, will be announced as the card’s launch date approaches.
Users who wish to obtain the LBank credit card can order it from the exchange’s website. The card comes in different options, including a metal version. Certain users can also acquire a specially offered VIP version that provides up to 2% cashback when used.
“For us, an important point is that users from all over the world can order and use our credit card. Our vision is to make crypto assets safer and circulation freer. Launching our own credit card is a significant step towards achieving this goal,” stated Eric He, the founder of LBank.
This is a press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.
Economist Jim Rickards Warns of a CBDC-Supported Social Credit System in the US: ‘It Can Happen Here’
Jim Rickards, an economist and investment banker, has warned about the establishment of a social credit system powered by the issuance of a central bank digital currency (CBDC). According to Rickards, this combination could be used to restrict the civil liberties of Americans by limiting their capabilities to travel and their reach on social media platforms.
Jim Rickards on a Hypothetical CBDC-Fueled Social Credit System: ‘Yes, It Can Happen Here’
Jim Rickards, an economist with more than 40 years of experience in investment banking, has warned about a hypothetical social credit system in the U.S. powered by a central bank digital currency (CBDC). In his latest article, Rickards explains that issuing a CBDC would allow the government to get the data needed to construct such a system.
Rickards stated that the information collected by monitoring transactions on a CBDC would facilitate “the creation of a social credit system that allows governments to punish those who engage in unapproved activity such as buying guns, donating money to the wrong political party, buying unapproved literature, etc.”
While recognizing this might sound paranoid to some, Rickards compares these measures to the ones taken by the federal government to stop the Covid pandemic, declaring:
Before the pandemic, you probably wouldn’t have thought that any of this was possible. But it all happened. When you think of it in that light, you begin to understand that some type of social credit system in the U.S. really isn’t that far-fetched.
A System Built for Control
In Rickards’ hypothetical system, implementing a CBDC would allow the government to control or block people’s movement to other cities or countries, limit their liberties by nullifying their opinions on social media, and even target them via intelligence agencies. Using the CBDC would be the only way of paying, and a social credit score would be the tool for limiting these actions.
According to his forecast, this might be done deceptively, establishing measures to pursue extremists and criminals first. On this, he declared:
It’ll all be made to sound very benign, even necessary, to support ‘our democracy’ against MAGA types, white supremacists, climate deniers and domestic terrorists.
Others have also risen to criticize and sound the alarm against the issuance of a CBDC in the U.S. In May, Florida Governor Ron DeSantis signed a law prohibiting the use of CBDCs in the state. Presidential Candidate Robert F. Kennedy Jr. has also been vocal against CBDCs “because they are instruments of control and oppression, and are certain to be abused.”
What do you think about Jim Rickards’ warnings? Tell us in the comments section below.