On March 12, the Hong Kong Monetary Authority (HKMA) launched what is known as the stablecoin issuer sandbox arrangement. The HKMA stated that applicants interested in establishing a stablecoin business in Hong Kong should have a sound business plan. The regulator also clarified that admission into the sandbox does not imply endorsement or support for […]
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Edward Snowden Calls Bitcoin ‘Most Significant Monetary Advance Since the Creation of Coinage’
Edward Snowden, a privacy advocate and former National Security Agency (NSA) contractor and whistleblower, says bitcoin “is the most significant monetary advance since the creation of coinage.” He views his statement as “unpopular but true.” Edward Snowden’s ‘Unpopular but True’ Bitcoin Statement Edward Snowden, a privacy advocate, posted about bitcoin on social media platform X […]
Bitcoin News
Brad Mills Reflects on Bitcoin ‘Season 2’ — A New Era of Monetary and Platform Coexistence
Brad Mills discusses the Bitcoin “Season 2” narrative, a phase that signifies a coexistence and rivalry between the traditional monetary maximalists and the newly emerging platform maximalists.
Brad Mills Discusses the Rise of Platform Maximalism in ‘Season 2’
In a thought-provoking post on X, Brad Mills, a notable figure in the Bitcoin community, delves into the evolving dynamics of Bitcoin’s ecosystem, specifically something referred to as “Season 2.” Brad Mills is known for his early involvement, expertise, and advocacy for bitcoin as well as a founder of multiple crypto startups.
Season 2 refers to, in Mills’s own words, “the split of the monetary maximalist activist Bitcoiners from the platform maximalist entrepreneur Bitcoiners.” Mills, initially skeptical of the Season 2 concept, acknowledged the growing influence of entrepreneurs who are innovating on Bitcoin’s platform.
In what Mills terms as “Season 1,” the Bitcoin community witnessed intense debates and conflicts between these two camps. This period was characterized by significant developments such as the Bitcoin Cash fork, the Liquid Network, and the Lightning Network, which focused primarily on bitcoin’s monetary use.
However, Mills points out a shift in this dynamic as the community gets ready to transition toward an era he calls “the 5th epoch” of Bitcoin. “Season 2 means the era of Bitcoin where the platform maximalist cypherpunk capitalists have just as much influence over Bitcoin as the monetary maximalists activists,” he stated.
Mills, who seems partial to the monetary use case but is actively involved in both camps, emphasized the importance of understanding both perspectives. He recounted his experiences with projects like Counterparty and Omnilayer, which were once sidelined but are now gaining recognition.
This new era has also seen a surge in economic activities, with miners and investors reaping substantial profits from these innovative applications. “Not only are miners earning hundreds of millions of dollars extra by mining these transactions, but Bitcoin Platform Maximalists are coming out of the woodwork to come back to bitcoin to use it,” Mills observed.
The rise of platform maximalism is also bringing to light various issues and potential improvements in Bitcoin’s design, particularly in scaling and user experience. This shift, according to Mills, is contributing to a decline in the cultural relevance of the so-called “toxic maxi” and an increase in the influence of more innovative thinkers, dubbed “toxic wizards.”
Mills concluded with a forward-looking perspective:
This doesn’t mean that they are going to ruin bitcoin for the monetary use case – it just means that we will have to work harder to compete with them.
They are very hard workers.
Do you favor the monetary or platform use case for Bitcoin? Share your thoughts and opinions about this subject in the comments section below.
Angolan National Assembly Approves Crypto Law to Safeguard ‘Monetary Sovereignty’
The Angolan National Assembly recently approved legislation that seeks to address crypto mining’s impact on the environment as well as safeguarding the country’s “monetary sovereignty.” The objective of this legislation is to also curb illicit activities by preventing bad actors from using cryptocurrencies to launder money.
Legislation Initiated by President Joao Lourenco
The Angolan National Assembly recently unanimously approved a groundbreaking law that addresses cryptocurrency mining and virtual currency within the country. The legislation aims to safeguard the sovereignty of Angola’s monetary policy. Otoniel Dos Santos, the country’s Secretary of State for Finance and Treasury, emphasized that the passage of this law was also necessitated by crypto mining’s impact on the environment and the country’s energy security.
According to a report by Ver Angola, the law, which was initiated by Angolan President Joao Lourenco, received 167 votes in favor and had zero nay votes or abstentions. The objective of this legislation is to also curb illicit activities by preventing bad actors from using crypto assets to launder money.
In a speech before the National Assembly in which he made the argument for the law’s passage, Dos Santos said:
The instrument also proposes to prevent, in general, and special way, within the framework of criminal policy, conduct that jeopardizes national monetary sovereignty and also protects the energy and the environmental system, thus allowing this reality not to impact the energy and environmental security of our country.
Furthermore, since crypto assets fall outside the regulatory scope of the National Bank of Angola, this law ensures that Angolan citizens have the legal means to seek redress in case of disputes related to digital currencies.
As per the Ver Angola report, the law, which is set to be discussed further, has five chapters covering issues ranging from crypto mining and the circulation of virtual assets to provisions of the law that pertain to crimes against the environment and financial system.
What are your thoughts on this story? Let us know what you think in the comments section below.
Hong Kong Monetary Authority Advances e-HKD Tests, Mbridge Project
The Hong Kong Monetary Authority (HKMA) has recently completed a series of tests regarding the programmability of the e-HKD, the proposed Hong Kong central bank digital currency (CBDC). While still in its initial phases, the e-HKD presents “interesting” use cases, HKMA CEO Eddie Yue stressed. He also revealed that the Mbridge project aims to have a minimum viable product for mid-2024.
Hong Kong Monetary Authority Advances e-HKD Research
The Hong Kong Monetary Authority (HKMA) has recently offered new insight into the different tests conducted with the e-HKD, a proposed central bank digital currency (CBDC). Eddie Yue, CEO of the HKMA, revealed that these tests focused on the programmable function of the e-HKD, allowing the issuer to establish certain limits in which the digital currency can be used.
According to the South China Morning Post (SCMP), this feature was tested by the Bank of China in Hong Kong this month. Furthermore, the bank has teamed up with ten firms, allowing customers to use the e-HKD in various retail payment promotions.
On the significance of these tests, Yue stated:
There are some interesting use cases of e-HKD in the areas like programmable payments, and in new areas like tokenised deposits and tokenised assets.
However, Yue detailed that e-HKD was still just in its trial stages, stressing that the HKMA had to “find a use case that is better than the current retail payments. Because if you are not either safer, faster, or more convenient, then it will not be doable.”
Project Mbridge
The HKMA is also a part of Project Mbridge, a CBDC network currently being tested jointly with the People’s Bank of China (PBOC) and the central banks of Thailand and the United Arab Emirates. Regarding this test, Yue stressed that the four participants were working out “important policy issues like governance and liquidity provisions,” getting ready to launch a minimum viable product by mid-2024.
Yue’s estimations differ from what Reuters, citing four people with knowledge on the subject, reported in August when it informed that Mbridge might have a minimum working product ready by year-end. Mbridge is currently under the watch of several central banks, which fear it could be used to move funds beyond the limits and sanctions of Western countries.
What do you think about the e-HKD tests conducted by the Hong Kong Monetary Authority and the Mbridge project? Tell us in the comments section below.
Monetary Transfers Readily Displace Inscriptions on Bitcoin, Glassnode Reveals
Ordinal inscriptions have quickly consumed Bitcoin’s available block space since their debut last year, a study by blockchain analytics firm Glassnode found. These text and image files act as “packing filler,” filling any remaining space in blocks after higher-value transactions are added, the study showed.
Bitcoin’s Block Space: Monetary Transfers Overpower Inscriptions
Though there’s been a surge in Ordinal inscriptions in 2023, a Glassnode study found that financial transactions remain the priority on Bitcoin’s blockchain. Glassnode researchers emphasized that “there’s little evidence inscriptions are pushing out monetary transfers.”
“Inscriptions appear to be buying and consuming the cheapest available blockspace, and are readily displaced by more urgent monetary transfers,” the report states. Despite the increase, inscriptions account for about 20% or less of transaction fees paid to miners.
The technology lets users add content to the Bitcoin blockchain using the Segwit data structure and Taproot. An initial wave of image NFTs shifted to mainly text files as the BRC-20 token standard appeared, Glassnode researchers said.
Daily transaction counts have exceeded 550,000 several times this year as inscriptions add more transfers to the limited block size. The average block now contains up to 3,500 transactions, up from 2,500 in past years, the report showed.
Of all confirmed transactions, inscriptions comprise 40% to 60% since May. The resulting UTXO set grew by more than 46 million entries (up 34%) in 2023, the quickest growth ever recorded. While miner revenue has increased, income per hash rate is near historic lows.
“With extreme miner competition in play, and the halving event looming, it is likely that miners are on the edge of income stress,” Glassnode said.
Overall network fees have doubled to about 38 BTC daily but represent only 4% of miner rewards. At the same time, Bitcoin’s mining difficulty has risen by 50% as more specialized and advanced mining equipment is used.
With the next halving predicted in just 206 days, Glassnode believes most miners will experience significant income challenges unless BTC prices increase significantly. Glassnode noted that while inscriptions might be taking up space, they haven’t boosted miners’ earnings.
What do you think about Glassnode’s report on inscriptions and monetary transfers? Share your thoughts and opinions about this subject in the comments section below.
Singapore’s Monetary Authority Issues 9-Year Ban on Three Arrows Capital Founders
The Monetary Authority of Singapore (MAS) has issued nine-year prohibition orders against Three Arrows Capital (3AC) founders Zhu Su and Kyle Davies, banning them from regulated financial activities in the country. The orders come after a MAS investigation that reportedly uncovered multiple violations of securities laws by the now-defunct crypto hedge fund and its directors.
MAS Slaps 9-Year Ban on Three Arrows Capital Founders Over Violations
The prohibition orders prevent Zhu and Davies from performing any regulated activity or taking part in managing or becoming a major shareholder of any Singapore capital market services firm. The notice disclosed that the bans took effect on September 13.
MAS first reprimanded 3AC in June for providing false information and exceeding assets under management limits. Further investigation found 3AC failed to notify regulators about hiring a portfolio manager, gave false information about the manager’s role, and lacked an adequate risk management framework for its cryptocurrency investments.
As directors of 3AC, Zhu and Davies were primarily responsible for ensuring compliance with regulations, MAS detailed. “MAS’ investigation showed that they had failed to discharge their duties and were responsible for TACPL’s breaches,” the entity wrote in the press release.
MAS Assistant Managing Director Loo Siew Yee stated: “Senior management of fund managers are required to implement robust risk management measures to protect the interest of investors. MAS takes a serious view of Mr. Zhu’s and Mr. Davies’ flagrant disregard of MAS’ regulatory requirements and dereliction of their directors’ duties.”
The prohibition orders represent the latest fallout from 3AC’s collapse last year. The prominent crypto hedge fund filed for bankruptcy in July 2022 after amassing over billion in liabilities and losing nearly all its assets. Regulators in multiple jurisdictions have cracked down on 3AC and its founders for alleged misconduct.
What do you think about the 3AC founders getting banned from regulated financial activities in Singapore? Share your thoughts and opinions about this subject in the comments section below.
South African Official: Common Currency Requires Central Bank, Threatens Monetary Policy Independence
South Africa’s minister of finance has explained why he believes that no country is ready for a common currency, including a unified BRICS currency. “Setting up a common currency presupposes setting up a central bank, and that presupposes losing independence on monetary policies, and I don’t think any country is ready for that,” he emphasized.
‘I Don’t Think Any Country Is Ready for That’
South Africa’s Minister of Finance Enoch Godongwana talked about the prospect of creating a common currency in an interview on the sidelines of the BRICS economic bloc’s annual summit in Johannesburg on Thursday. South Africa was the host of this year’s BRICS summit.
Despite widespread expectations of the BRICS countries announcing the creation of a common currency, potentially backed by gold, he stressed that “No one has tabled the issue of a BRICS currency, not even in informal meetings.” The official continued:
Setting up a common currency presupposes setting up a central bank, and that presupposes losing independence on monetary policies, and I don’t think any country is ready for that.
The BRICS nations (Brazil, Russia, India, China, and South Africa) announced at the conclusion of the summit that six countries have been invited to join as new members, with their inclusion set to commence on Jan. 1, 2024. The six nations are Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE).
One of the key topics extensively deliberated on at the BRICS summit was the use of local currencies in international trade and financial transactions, rather than relying on the U.S. dollar.
Godongwana stated that when South Africa trades with Botswana, for example, “we know the rate of exchange between the two currencies,” emphasizing that “There is no reason why we can’t pay them in pula and they pay us in rands.”
In their declaration, released at the conclusion of the summit, the BRICS leaders pushed for the use of local currencies. “We stress the importance of encouraging the use of local currencies in international trade and financial transactions between BRICS as well as their trading partners,” their declaration states.
What do you think about the statements by South Africa’s Minister of Finance Enoch Godongwana about the creation of a common currency? Let us know in the comments section below.
San Francisco Fed President Deems 2 Rate Hikes in 2023 ‘Reasonable,’ Urges Caution in Monetary Policy
Mary Daly, the president of the San Francisco Federal Reserve Bank, expressed her views this week, stating that she believes two additional rate hikes this year would be appropriate. However, she maintains a neutral stance regarding the forthcoming July Federal Open Market Committee (FOMC) meeting, emphasizing her desire to preserve flexibility by “maintaining optionality.”
Fed’s Daly Doesn’t Want to ‘Trip the Economy up Into an Unforced Error’
During the June FOMC gathering, the U.S. Federal Reserve members decided to refrain from raising the federal funds rate for that specific meeting. Jerome Powell, the current chairman of the Federal Reserve, informed the media that the upcoming July FOMC meeting would be a “live” one, as it would determine whether or not the central bank would increase the interest rate during that period.
Powell then testified before the House Financial Services Committee last Wednesday and indicated that the benchmark bank rate is likely to rise again this year. In an interview with Reuters, Mary Daly, the president of the San Francisco Federal Reserve Bank, expressed her belief that two more rate hikes would be a “very reasonable” projection. However, Daly also emphasized the need for caution and a gradual approach, given that the rate is currently at its highest level in 16 years.
“It is, in my judgment, prudent policy … to slow the pace of policy as you near the destination,” Daly stated.
During an interview with CBS’s “Face the Nation” last year, Daly discussed the Fed’s response to inflation and stressed the importance of caution and a “measured” approach. “History tells us with Fed policy that abrupt and aggressive action can actually have a destabilizing effect on the very growth and price stability we’re trying to achieve,” Daly said at the time.
Now, Daly asserts that the situation is “about balanced,” and a measured approach is still necessary to navigate through the current economy. “I want to make sure that we balance those risks on both sides, of under- or over-tightening,” Daly said. “Adding another six weeks to our decision space, to me that seems optimal and prudent.”
Daly stated that “taking a slower pace as we approach our destination means we save many Americans from either stopping short and wishing we had done more, or going too far and wishing we had done less.” In other words, Daly insists that if the central bank proceeds at a more gradual pace, it will be less likely to make mistakes that it may regret later. Daly told Reuters that she is committed to restoring price stability, but doing so requires caution.
“What I want to do, while we resolutely work to restore price stability – give these people back some peace of mind, and lives and livelihoods – is make sure we are doing it as carefully as we can so we don’t end up inadvertently, in our rush to do it today, trip the economy up into an unforced error,” added the president of the San Francisco Fed branch.
Last month’s consumer price index indicated that inflation is cooling, but at 4%, it still exceeds the Fed’s annual target of 2%. Americans are also grappling with the highest credit card debt since 1999, when the Fed began recording the figures, and a Newsweek poll shows that Americans are actively relying on credit cards to mitigate inflationary pressures. While a more restrictive monetary policy may be necessary, Daly is currently uncertain if it will achieve the desired balance.
“More tightening may be required to get the economy sustainably back into balance. But do I know that? No….we are going to have to find the terminal rate by looking at the data,” concluded Daly.
What are your thoughts on Mary Daly’s perspective of two rate hikes in 2023 and her emphasis on caution in monetary policy? Share your thoughts and opinions about this subject in the comments section below.
Hong Kong to Have Tight Crypto Regulations, Head of Monetary Authority Says
Companies attracted by the plan to turn Hong Kong into a hub for digital assets should expect strict regulations, the region has indicated. Authorities are preparing new licensing rules for service providers working with cryptocurrencies and guidelines for banks interacting with crypto firms.
Crypto Hub Hong Kong Has No Intentions to Adopt ‘Light-Touch’ Regulations
Hong Kong’s central banking institution has made it clear that crypto companies enticed by the city’s attempt to establish itself as a hotspot for digital-asset business will not operate under very lax regulations. In an interview on Tuesday, the Chief Executive of the Hong Kong Monetary Authority (HKMA) Eddie Yue elaborated:
Our regulation will be tight. We will let them create the ecosystem here and that actually brings a lot of excitement. But that doesn’t mean light-touch regulation.
On June 1, Hong Kong will launch a new licensing regime for virtual-asset service providers, Bloomberg noted in a report quoting Yue’s statements. The plan is also to allow retail investors to acquire and trade major cryptocurrencies like bitcoin and ether.
The crypto-friendly move is part of efforts by authorities in China’s special administrative region to restore Hong Kong’s credentials as a leading financial center in the aftermath of restrictions imposed in response to the Covid pandemic and political unrest in the territory.
While there has been no change in China’s official policy regarding crypto-related activities, which remain heavily restricted in the mainland, there have been indications that Hong Kong’s push to become a major hub for digital assets has the backing of Beijing.
A report in late March revealed that state-owned Chinese banks are ready to serve crypto companies in the city. Further guidance for providing banking services to clients in the sector are under development, Yue said during the Bloomberg Wealth Asia Summit.
Regulations for the industry have been tightening around the world following last year’s market crash and the collapse of major players such as FTX, a leading cryptocurrency exchange. While the U.S., for example, has been cracking down on businesses with enforcement actions and lawsuits, Hong Kong seems to be moving in the opposite direction.
The city’s crypto guardrails were very tight in the last few years, Yue commented. They have now been lowered to a “reasonable and sustainable level” but they won’t allow the recurrence of any FTX-type event in the city, he emphasized. Hong Kong’s legislative framework introducing the new crypto rules will bring transparency and clarity, Yue insisted in the interview.
Do you think Hong Kong’s new regulations will be favorable enough to attract a significant number of crypto companies to the region? Share your thoughts on the subject in the comments section below.