On Thursday, Visa (V) announced that it would take its crypto services to the next level by teaming with blockchain software company ConsenSys to create a central bank digital currency on-ramp.
The payments giant plans to launch a “CBDC sandbox” in the spring, where central banks can try out the technology after minting it on ConsenSys’ Quorum network.
Stepping Forward To Expand Cryptocurrency Market
The collaboration is the latest step in the expanding cryptocurrency market, which has seen central banks compete to produce their digital coins and big financial institutions dabble in cryptocurrency payments.
CBDBs can be powered by blockchain or distributed ledger technologies. CBDC protocols, unlike cryptocurrencies like bitcoin (BTC-USD) and ether (ETH-USD), are always “permission,” which means central banks retain monetary and governance authority.
For CBDCs, the partnership implements a “two-tier” distribution mechanism. Central banks would construct their digital currency using Consensys’ Quorum platform to determine the currency’s monetary and governance principles. Using Visa’s infrastructure, they then distribute the currency through financial intermediaries such as commercial banks.
Eswar Prasad Highlights Some Benefits Of Visa-ConsenSys Concept
Some of the benefits of the Visa-Consensys concept were highlighted to Yahoo Finance by Eswar Prasad, a senior professor of trade policy at Cornell University and author of “The Future of Money.” It does not eliminate payment providers from the equation, and it may encourage competition to see who can provide more efficient and low-cost solutions.
Central banks, according to Prasad, will almost certainly opt to run their payment infrastructure.
However, he added that Visa’s strategy is notable because it might “help maintain the relevance of its payment network amidst fast-moving changes in the payment space that could undercut its business model.” Stablecoins and various fintech payment systems are also among the changes.
Since 2019, Visa has been working on crypto-related items, leveraging its current payment network to create “on-ramps” for buying crypto and “off-ramps” for converting it back to fiat currency.
It already uses a single stablecoin to settle transactions and has just launched a crypto consultancy service for banks interested in pursuing their cryptocurrency initiatives.
In the last year and a half, the number of countries looking into CBDCs has nearly doubled. At least 87 countries, accounting for 90 percent of global GDP, are contemplating financial technology in some way, according to the Atlantic Council’s CBDC tracker.
A CBDC has been established by nine central banks, including Nigeria, the Bahamas, and seven additional Caribbean nations. However, within that group, progress and goals have been inconsistent. Meanwhile, next month, China is preparing to introduce its prototype digital yuan to international tourists for the 2022 Winter Olympics.
Like the Federal Reserve, major central banks are unlikely to release a digital coin anytime soon. Fed Chair Jerome Powell indicated during his re-confirmation hearing earlier this week that the Fed’s long-awaited report on CBDCs will be released “in the coming weeks.” Still, he didn’t give a specific timeline.
In October, a top executive at eCurrency, a firm that has advised the US Treasury and the Federal Reserve on CBDCs for more than a decade, told Yahoo Finance that the Fed and US Treasury need congressional approval before issuing a central bank-backed token.
CBDBs have a wide range of applications. However, Visa’s global CBDC lead Catherine Gu told Yahoo Finance that two primary factors stand out based on interactions with central bankers.
To begin with, developing countries may leverage technology to provide financial access to previously unbanked populations. Second, CBDCs allow industrialized countries to more efficiently provide stimulus assistance in more focused ways to stimulate an economy by giving the money an expiration date or limiting its usage to specific transactions.
However, there is a barrier to CBDC adoption and acceptance among users. It all depends on how much authority the technology gives central banks — and whether that threatens the supremacy of fiat currencies like the US dollar, the world’s most widely used reserve currency.
While CBDCs may bring new monetary policy tools, it is unclear how democratic countries will set limits.
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Russia’s Move to Regulate Cryptocurrency Puts Other Nations on Notice
Russia will enact new regulations on cryptocurrency including tax standards, by February 18
Russia accounts for 11% of the BTC mining in the world. So Russia is all set to regulate the cryptocurrency sector reports blockworks.co. Moreover, Russia’s move to regulate the cryptocurrency sector will spur other nations to follow suit.
The Russian Government and Central Bank have drawn up a framework to draft new legislation or amend existing laws to oversee crypto as a currency. The measure will help to cushion the economic impacts of digital assets.
Cryptocurrency will become a part of the present financial regimen
According to Anto Paroian, chief operating officer at digital assets investment fund ARK36, Russia’s action must be seen in the perspective that cryptocurrency is here to stay, and this realization is finally dawning on nations. Cryptocurrency will sooner or later become a part of the present financial regimen. The political and economic costs of banning cryptocurrency are much greater than the inherent risks of the system.
Nick du Cros, head of compliance and regulatory affairs at CoinShares, feels that the measures will signal nations to enact local regulations quickly rather than wait for the big seven to make decisions. Nick talked about the political forum made up of Canada, France, Germany, Italy, Japan, the UK, and the US.
US could fastrack its own laws to regulate crypto
Russia giving a “sympathetic” ear to cryptocurrencies, including putting digital assets on its balance sheet, will also pull the US out of its stupor and look closer to the cryptocurrency segment.
Anthony Pompliano, the founder of Pomp Investments, said that there is global competition in developing a decentralized, open system where anyone can access the system. Once your adversary adopts it, you will have no other option but to embrace it.
The US will closely watch the events leading to February 18, when Russia will draw up the legislation about cryptocurrencies. Russia’s central bank last month has proposed restrictions on the circulation and trade of cryptocurrencies. It also proposed to regulate crypto mining. However, Russian President Vladimir Putin supports a plan to tax and regulate mining, referring to Russia’s “competitive advantages” from crypto mining.
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American Minorities Could Turn To Cryptocurrencies To Pay Their Bills
The US population contains a large number of crypto holders. The crypto market witnessed a boom in recent years, and despite the recent market crash, digital currencies are likely to increase in worth in the future. Millions of US investors are inclined towards this market due to high returns over a short period. CNBC reports that around 24% of crypto holders are Hispanic. The survey report shows that a large percentage of the minority community has crypto assets; the research shows that minorities can pay their hefty bills in cryptocurrencies due to their diverse investment portfolio.
Majority Of Crypto-Holders Are Minorities
CNBC quoted Charlotte Principato, financial service analyst at Morning Consult, who said, “The majority of crypto owners are white, but they’re also disproportionately Hispanic. There are communities out there that need better ways to pay, and that is one cryptocurrency’s big promises, especially for Bitcoin.” The rise in inflation in neighboring countries will encourage minorities to increase crypto assets. The report suggests that payments in crypto are likely to increase in the coming months. Several digital platforms allow workers to receive their salaries or pay their bills after converting USD into the desired cryptocurrency.
The Crypto Industry Has Grabbed Many Eyeballs
The crypto market is full of risks and potential data breaches, so investors and traders need to remain cautious of providing sensitive information. Bitwage offers a variety of services for efficient crypto transactions. The platform seeks to help investors understand the market pattern and derive optimal profits. Several individuals choose crypto due to its efficient and low-cost operations; the market has recently witnessed a steep rise in investment.
CNBC quoted Ben Weiss, CEO of CoinFlip, who said, “Whether you’re unbanked or not, whether you’re investing or not, we want to be there for the average person to get crypto. We don’t want to see the same issues of wealth inequality.” Millions of global investors need to ride the volatility and huge risks associated with unpredictable returns. Several investors prefer long-term investments over day-to-day trades; this ensures a significant return despite the current ups and downs.
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Cryptocurrency rules and scenario in different European Nations
Cryptocurrency has increased and has intruded into every aspect of commerce. It has been least regulated and often tainted by fraud, money laundering, and hacks — it has often felt like a complete free-for-all.
However, in recent times, efforts to regulate cryptocurrencies are on, and authorities in Europe are finally taking steps to rein in the industry.
The approach to regulating crypto has been varied and ranges from banning crypto ads in the UK and Spain to tighter background checks in Estonia to a largely hands-off system in Switzerland and Malta reports sifted.eu.
For the fans of cryptocurrency, bitcoin, Ethereum, and other coins are the ultimate store of value equivalent to gold. However, to detractors, cryptocurrency is another bubble waiting to burst. Skeptics say that the investor will lose all his money sometime in the future.
Regulators want to crack down on crypto companies, especially those which invest heavily in advertising and creating hype. So Europe is perfecting a methodology that will make it easier to trace crypto payments and prevent money laundering in Brussels.
Estonia-From open door policy to restricting crypto-activities
Estonia was the first nation to grant crypto licenses. It attracted substantial initial interest. Estonia has since revoked almost 2,000 of these, and only around 400 licensed companies remain. It is alleged that billions of Euros in dirty cash had floated through the Estonia-based bank branch of Denmark-based Danske Bank from 2007 to 2015 in one of the largest illicit money scandals. After this scandal, Estonia tightened its rules for cryptocurrencies.
Spain-Rules for Crypto adverts
As such, Spain has no specific rules on cryptocurrencies. However, it is imposing restrictions on social media influencers’ crypto promotion. The latest rules specify those influencers and their sponsors to pre-notify a stock market supervisor of some posts and to warn of crypto’s risks or face fines. Fines for non-compliance could reach €300k.
EU –Making Crypto more traceable
European Union regulators want to make crypto more traceable. Any entity that transfers crypto assets will have to collect details of senders and recipients to help authorities crackdown on dirty money. A bill is also in the offing which seeks to outlaw anonymous crypto wallets just as anonymous bank accounts are already banned under EU anti-money laundering rules. The law will apply to 27 EU states.
The UK-Adverts under watchful eye of FCA
The UK, like Spain, had scant regulations but has started to apply rules. All crypto adverts will have to be approved by Financial Conduct Authority. Thus the UK will designate crypto akin to financial promotions for stocks and insurance products, with possible fines of severe breaches.
Sweden-Wants its own CBDC
This nation is terrified that cryptocurrency will replace Krona. As a result, the government has fast-tracked the development of its own central bank digital currency. Sweden’s Riksbank, the world’s oldest central bank Governor, is highly skeptical about Bitcoin, and the country has also called for a European ban on energy-intensive bitcoin mining.
Switzerland-Rolling the red carpet
While other nations are thinking of curtailing the crypto sector, the Swiss are keen to promote it and gain a prominent crypto fintech. As a result, Swiss regulators have worked faster than their counterparts and perfected a completely new crypto legal regime last year, recognizing “tokenized securities” on a blockchain as having the same legal standing as traditional assets.
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