In this week’s edition of our Weekly Wednesday news blog, we cover a range of developments in the cryptocurrency world. The US debt ceiling deal blocks a proposed 30% Bitcoin mining tax, providing relief for miners and sparking debates in Congress. Hong Kong takes significant strides towards becoming more crypto-friendly, with initiatives such as lifting the ban on crypto retail trading and conducting a CBDC trial. Meanwhile, Wall Street prepares to challenge established crypto exchanges, and the CEO of Coinbase warns of China’s potential advantage in the face of restrictive US crypto regulations. We also notice hints from US presidential candidates about their stance on cryptocurrency ahead of the 2024 election.
US Debt Ceiling Deal Blocks 30% Bitcoin Mining Tax, Congressman Confirms
In the latest agreement on the US debt ceiling, taxes proposed by the Biden administration, including the Digital Asset Mining Energy (DAME) tax, have reportedly been blocked. The DAME tax aimed to impose a 30% tax on cryptocurrency mining firms, but U.S. Congressman Warren Davidson confirmed its exclusion from the bill. The move is seen as a victory for Bitcoin miners, who argued against the tax’s environmental and societal justifications. The comprehensive bill aims to suspend the nation’s debt limit until 2025 while imposing spending restrictions, but it still faces scrutiny and debates in Congress.
Hong Kong and UAE Central Banks Collaborate on Crypto Rules and Fintech Development
The central banks of Hong Kong and the United Arab Emirates (UAE) have announced their collaboration on cryptocurrency regulations and the development of financial technology. The Hong Kong Monetary Authority (HKMA) and the Central Bank of the UAE (CBUAE) have agreed to strengthen cooperation in virtual asset regulations, joint fintech development initiatives, and knowledge-sharing efforts. The collaboration aims to align the financial service sectors of both regions and leverage their complementary strengths. This partnership comes as Hong Kong’s Securities and Futures Commission (SFC) prepares to allow virtual asset service providers to cater to retail investors, signaling the city’s recognition of the long-term potential of cryptocurrencies.
Wall Street Prepares to Challenge Established Crypto Exchanges
Leading financial institutions on Wall Street, including Standard Chartered, Nomura, and Charles Schwab, are venturing into the world of cryptocurrencies by creating their own digital markets trading platforms. These traditional finance groups are betting that fund managers will prefer familiar and trusted brands over the opaque cryptocurrency exchanges that currently dominate the sector. By establishing separate crypto companies that offer exchange and custody services for digital tokens like Bitcoin and Ether, these institutions aim to address concerns regarding regulation, transparency, and security. They believe that their reputation and expertise in the finance industry will give them an edge over established crypto companies plagued by scandals and regulatory actions. If successful, this move could pose a challenge to the dominance of incumbents like Binance and Coinbase and bring more transparency and convergence in pricing to the crypto market.
China Poised to Benefit from Restrictive US Crypto Regulations, Warns Coinbase CEO
Coinbase CEO Brian Armstrong has cautioned that China stands to gain the most from the United States’ restrictive crypto regulations, which he believes could lead to the country losing its status as a global financial leader and innovation hub. Armstrong emphasized that cryptocurrencies are more than just individual transactions, highlighting their potential to revolutionize various sectors by offering faster, cheaper, more private, and accessible platforms. He urged policymakers to provide regulatory clarity to the crypto industry, warning that failing to do so would result in the US needing to catch up and spend significant resources, potentially too late to regain its position.
Presidential Candidates Drop Hints on Their Crypto Stance Ahead of 2024 Election
As the 2024 US presidential election approaches, several Democratic and Republican candidates have given indications of their stance on cryptocurrency. President Joe Biden’s administration has taken an increasingly anti-crypto position, with Biden criticizing perceived crypto tax loopholes and emphasizing the lack of fundamental value in cryptocurrencies. Former President Donald Trump, on the other hand, has expressed skepticism towards crypto, calling it “fake” and a potential disaster. Other candidates like Ron DeSantis and Vivek Ramaswamy have shown more support for Bitcoin, while Robert F. Kennedy Jr. has touted crypto technologies as a major innovation engine. The positions of candidates Nikki Haley, Marianne Williamson, and Tim Scott on crypto remain unclear.
OSC Investigating Binance Despite Exit from Canada
The Ontario Securities Commission (OSC) is conducting an investigation into cryptocurrency exchange Binance’s activities in Canada, despite the exchange’s recent announcement of its withdrawal from the country due to regulatory disagreements. The OSC has issued an investigation order and summons, seeking to compel Binance to produce documents and data related to its operations. Binance is arguing against the investigation, citing a previous agreement with the OSC that prevented enforcement actions based on past conduct. The exchange’s exit from Canada was prompted by new regulations introduced after the collapse of FTX Inc. in 2022.
Russia Scraps National Crypto Exchange Plans in Favor of Regulating Private Exchanges
Russia has abandoned its plans to create a national cryptocurrency exchange and will instead focus on establishing regulations for private cryptocurrency exchanges, particularly for cross-border transactions. The decision comes after the lack of support from authorities, including the Ministry of Finance. The aim is to facilitate cross-border settlements, including bypassing sanctions restrictions, while ensuring compliance with regulations. The Central Bank of Russia (CBR) will be responsible for regulating these exchanges, with the rules to be included in the draft law on experimental legal regimes. The move is expected to minimize risks and enable trillions of rubles worth of transactions.
Hong Kong Embraces Crypto: CBDC Trials and Crypto Retail Trading
Hong Kong has been actively pursuing a crypto-friendly stance, with several initiatives aimed at embracing the digital asset industry. The city’s Cyber Security and Technology Crime Bureau launched the CyberDefender Metaverse to educate people on Web3 technology and associated risks. The Securities and Futures Commission lifted the ban on crypto retail trading, allowing licensed virtual asset providers to offer services to retail crypto traders. Crypto exchanges are also moving to Hong Kong to take advantage of the favorable environment. Additionally, Hong Kong initiated a central bank digital currency (CBDC) trial, exploring the potential of a digital Hong Kong Dollar (e-HKD) and collaborating with banks and payment companies to test various use cases.
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