Northern Data, a European cloud computing, artificial intelligence (AI), and bitcoin mining company, is reportedly mulling going public in U.S. markets. The company would be in talks to complete its initial public offering (IPO) in 2025, creating an entity combining its AI cloud computing and data center divisions. This new entity would have a valuation […]
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Brazilian Stock Exchange B3 Mulls Offering Ether Futures
B3, the Brazilian stock exchange, is considering extending its native cryptocurrency trading options to offer ether futures contracts to its customers. The exchange, which has been a pioneer in Latam offering crypto-related trading products, would be focusing on institutional investors who want to diversify their traditional or crypto portfolios with more options. Brazilian Stock Exchange […]
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Nigeria Mulls Over Banning P2P Crypto Transactions; Labels Crypto Trading as National Security Concern
Nigerian authorities are reportedly planning to prohibit financial institutions from facilitating peer-to-peer cryptocurrency transactions. According to a report, Nigeria’s Office of the National Security Adviser has classified cryptocurrency trading as a national security concern. Three fintech startups, known for enabling such transactions, have been directed to block and report peer-to-peer cryptocurrency transactions to law enforcement […]
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BRICS Bloc Mulls Stablecoins, CBDC-Based System for International Settlements
Russian Deputy Foreign Minister Sergey Ryabkov revealed that the BRICS bloc has been considering the use of stablecoins for its common rail payment systems. In an interview with TV BRICS, Ryabkov stated that the use of stablecoins and a connection linking the CBDCs of the participants were studied as part of the integration processes of […]
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Latam Insights: Paraguay Targets Bitcoin Miners, Brazil Mulls Crypto Taxation Changes
Welcome to Latam Insights, a compendium of Latin America’s most relevant crypto and economic news during the last week. In this issue: Paraguayan lawmakers introduce a bill to ban cryptocurrency mining, Brazil to change crypto taxation framework, and a poll finds that Latam believes CBDCs might help combat corruption in the region. Paraguayan Lawmakers Introduce […]
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Russia Mulls Cryptocurrency Mining Disconnection Proposal
Cryptocurrency miners might be disconnected for up to 500 hours per year in Russia, according to a proposal supported by the State Duma Energy Committee to tackle the energy deficit in some regions. The initiative would be an alternative to introducing special tariffs directed to miners that would increase power expenses by up to five times.
Russia Considers Disconnecting Cryptocurrency Miners for up to 500 Hours per Year
Russia is considering the application of a reform that would disconnect cryptocurrency miners depending on energy availability. According to Izvestia, the proposal, supported by the State Duma Energy Committee based on a study by the Higher School of Economics, would classify miners in a new power supply reliability group, subject to disconnection.
While households are part of a power reliability group that can just be taken off the grid for 72 hours per year, miners would be subject to disconnection for up to 500 hours per year (almost 21 days) to tackle the power deficit some regions of the country face.
The proposal, still being studied, would serve as an alternative to the establishment of higher power tariffs for cryptocurrency mining activities being drafted by the Ministry of Energy.
These plans come to tackle the problems in some parts of the Irkutsk region, which is facing an energy shortage due to the cryptocurrency mining activity rising and benefiting from the lowest electricity prices in the world.
Nonetheless, raising power tariffs might affect this mining boom. Oleg Ogienko, director of government relations at Bitriver, stated that if this comes to fruition, mining companies will start distributing their activities to residential areas, going to a gray zone, or just moving their operations elsewhere.
Alexey Tarapovsky, founder of Anderida Financial Group, criticized the cryptocurrency mining-specific tariff raise. He explained:
Increasing the cost only for mining can be regarded as tariff discrimination and will lead to an imbalance. Many enterprises and businesses consume similar amounts of energy.
What do you think about the measures proposed to tackle the energy problem in some regions of Russia? Tell us in the comments section below.
South Korea Mulls Issuing Crypto Mixing Regulations to Curb Money Laundering
Financial authorities are preparing to issue cryptocurrency mixing-specific regulations in South Korea to stop criminal groups from using these tools to launder funds obtained illegally. The Korean authorities are discussing whether to allow virtual asset service providers (VASPs) to reject transactions from these privacy-enhancing services.
South Korea Starts Discussing Cryptocurrency Mixing Regulations
Korea might enact regulations against cryptocurrency mixing platforms in the future. According to local reports, the Financial Intelligence Unit (FIU) would be considering the introduction of a legal framework targeting cryptocurrency mixing platforms, aiming to curb illegal money laundering by criminal groups.
The Korean authorities would be studying if to allow virtual assets service providers (VASPs) to reject transactions from addresses having used these services.
Mixing, a process that encompasses the obfuscation of the origin of the funds of a transaction or a series of transactions, has been targeted by the U.S. Treasury Department Financial Crimes Enforcement Network (FinCEN), which has proposed rules that seek to increase the transparency around platforms providing these services.
In October, the Office of Foreign Assets Control (OFAC) sanctioned Sinbad, a mixing platform linked to the North Korean hacking collective Lazarus. In August 2022, the office also flagged Tornado Cash, an Ethereum-based mixing platform.
The stance that the U.S. is taking on virtual assets mixing platforms has influenced the regulatory discussions now taking place in Korea. A FIU official stated:
Last year, when the United States introduced mixer regulations, discussions began in Korea as well.
These are only early talks about the issue, and a definitive decision on the subject is not expected to be announced anytime soon, given the nascent trait of the problem and the lack of international coordination in facing it. Another FIU officer stressed:
Mixing is an issue shared internationally, so cooperation from each country is necessary. As this is the first system introduced by the United States, international discussions have not yet progressed in depth.
What do you think about issuing specific cryptocurrency mixing regulations in South Korea? Tell us in the comment section below.
Japan Mulls Exempting Companies From Paying Taxes on Unrealized Cryptocurrency Gains
Japan is considering exempting corporations from paying unrealized gains income taxes related to cryptocurrency holdings. The measure, proposed as part of a reform in Japan’s tax code, would allow companies to avoid paying taxes for cryptocurrencies even if their market value changes during each fiscal year.
Japan to Stop Taxing Corporations for Unrealized Cryptocurrency Gains
The Japanese government is about to overhaul its tax code, improving the regime for companies holding crypto long-term. A new consideration in the tax code discussed by policymakers and slated to be part of the 2024 tax reform establishes that cryptocurrency holdings of corporations would not be taxed for unrealized gains.
Currently, Japan taxes the cryptocurrency holdings of corporations by taking market prices at the start and the end of each fiscal year as a reference, something that has been widely criticized as detrimental for companies holding these assets. The approval of this proposal would mean that companies holding these assets in foreign countries — like Singapore, Dubai, and Switzerland — could bring their crypto holdings to Japan. However, this would mean that the Japanese government would also lose part of the tax collected from companies, taking an undetermined hit.
Nikkei Japan clarifies this would only apply to cryptocurrencies being held as part of companies’ property and not used for short-term trading purposes.
The Japan Blockchain Association called for these changes in June, stating that the tax regime was hindering the growth of Web3 in the country and causing market instability due to the need for companies to sell part of their currencies to pay the corresponding taxes.
Japan has been progressing in the cryptocurrency taxation field, having lifted another tax on cryptocurrencies self-issued by companies in June. Before, companies had to pay taxes on unrealized gains for cryptocurrencies they themselves issued. However, this measure was lifted, opening Japan for companies that want to issue, or have issued, such currencies.
What do you think about the possible change in Japan’s cryptocurrency tax regime? Tell us in the comments section below.
China Mulls Digital Yuan Settlements for Commodities
The People’s Bank of China (PBOC) is considering using the digital yuan to settle services and commodities trades with Hong Kong. According to Di Gang, deputy director-general of the Digital Currency Institute of the PBOC, this would help companies avoid the difficulties of using a single high-cost, cross-border payment channel.
People’s Bank of China Eyes Digital Yuan Usage for Commodities and Services Settlements
The People’s Bank of China (PBOC) is examining the potential application of the Chinese central bank digital currency (CBDC), the digital yuan, for commodities and services settlements with Hong Kong. Di Gang, deputy director-general of the Digital Currency Institute of the PBOC, revealed the bank was considering this use case during the Hong Kong Fintech Week, an Asian finance conference.
Di explained that the cooperation between Hong Kong and the mainland could allow the trade and subsequent payment of natural gas, oil, and other services using the digital yuan. The introduction of the digital yuan would allow companies to avoid the traditional single payment channel, which features high-cost and low-efficiency operations compared to the Chinese CBDC activities, Di added.
Di stressed that other pilot applications could be considered between the mainland and Hong Kong to expand personal application scenarios and improve user experience.
Other Applications
The PBOC has also pioneered other applications to internationalize the digital yuan as a payment method for commodities, including oil. In October, reports indicated that Petrochina, one of the largest Asian oil companies, had settled a purchase of one million crude barrels in digital yuan, using the Shanghai Oil and Gas Trading Center as an intermediate.
Other clearing houses have also adopted the digital yuan as part of their payment options. In June, the Shanghai Clearing House, a top-three provider of securities settlement, announced support for digital yuan settlements for commodities in bulk, offering zero trading fees to incentivize its usage.
The usage of the digital yuan could also help Chinese companies sidestep economic sanctions, avoiding the use of traditional settlement channels. Back in August, experts expressed worries about the application of the digital yuan in the Mbridge project, a CBDC-based platform that, while still in its testing stages, would link the economies of China, Hong Kong, Thailand, and UAE, aiming to serve a trading market of more than 0 billion.
What do you think about using the digital yuan to settle commodities trade between Hong Kong and China? Tell us in the comments section below.
US Mulls Tighter Restrictions on AI Chip Shipments to Chinese Firms, Report
The government in Washington is reportedly considering further limiting China’s access to U.S. processors used in artificial intelligence (AI) applications. The current restrictions, which were introduced last year, allow Chinese companies to source the chips through overseas subsidiaries.
Washington Seeks to Further Curb Chinese Access to American AI Chips, Sources Say
The administration of President Joe Biden may broaden the curbs on the shipments of U.S. semiconductors used for AI to Chinese companies to include their units abroad, Reuters reported on Friday, quoting people familiar with the matter.
The measures announced in 2022 sought to thwart Beijing’s military advances by preventing the supply of American AI chips and chipmaking tools to China. However, the initial restrictions did not cover overseas subsidiaries of Chinese firms.
This meant they could still be imported into the People’s Republic or accessed remotely by China-based users, the report noted. However, the loophole is likely to be closed soon, according to one of the knowledgeable sources.
Greg Allen, a director at the Center for Strategic and International Studies, is convinced that companies from China are able to acquire the processors. “Absolutely, Chinese firms are purchasing chips for use in data centers abroad,” he said, pointing to Singapore, a major hub for cloud computing, as an example.
Washington has been trying to halt the progress of China’s AI capability which currently depends on access to American chips. According to a study by the Center for Security and Emerging Technology (CSET) think tank released earlier this year, almost all AI chips procured via Chinese military tenders over an 8-month period in 2020 were designed by U.S.-based companies Nvidia, Xilinx, Intel, and Microsemi.
In August of this year, the U.S. government expanded a restriction on the exports of AI chips made by Nvidia and AMD to China to include certain countries in the Middle East. The new measures, expected as early as this month, are likely to cover other suppliers as well, the sources said.
Meanwhile, the launch and rising popularity of AI-based chatbots and assistants like Chatgpt and others have caused a deficit in the market for AI processors. Recent reports revealed that Chatgpt’s developer, Openai, is exploring making its own AI chips to deal with the shortage.
Do you think the U.S. will expand curbs on AI chip shipments to Chinese companies in the coming weeks? Tell us in the comments section below.