Despite the surge in popularity of digital assets, the vast majority of investors, both retailers and institutional investors, remain on the sidelines awaiting clarification of regulations from their respective governments. Last week, we made a lot of progress in this regard, with examples from around the world.
Each of the following examples illustrates the process, but each is not always positive. Despite growing beliefs about the future of digital assets, the skepticism surrounding the usefulness of digital assets and their potential impact on the existing economy remains sound.
Cuba Legalizes Cryptographic Services
On April 26, the Central Bank of Cuba announced a decision that could begin the adoption of digital assets in the island nation.Based on release document, Central Bank of Cuba will begin issuing Virtual Asset Service Provider Licenses (VASPs) to applicants. These VASP licenses are only offered by the Central Bank of Cuba and allow exchanges to trade digital assets openly and freely on the platform. This move essentially legalizes services, including digital assets, within a year of considering Bitcoin as a legitimate means of payment.
This move is arguably a positive move to make it easier to access assets like Bitcoin, but restrictions remain and the following are not yet supported.
- Digital representation of fiat currency
- Digital securities
- Financial assets used in traditional banks and financial systems.
This development is a double-edged sword for exchanges operating within the Cuban border. This also means that the Central Bank of Cuba will begin cracking down on continuing exchanges without first acquiring VASP. Those with VASP are subject to greater monitoring, ideally preventing nighttime exchanges, and those without adequate safety practices do not harm potential investors.
The Central Bank of Cuba plans to begin issuing VASP licenses as early as May 16, 2022.
Bitcoin adopted as legal tender by the Central African Republic
Digital asset enthusiasts were delighted when El Salvador announced that Bitcoin would become fiat currency. It was a moment that marked an important mainstream adoption and was built on the economic influence of a decade already forged by Bitcoin. Now, in just a few months until 2022, the Central African Republic (CAR), under the leadership of El Salvador, has made Bitcoin a legal tender within its borders.
The bill, signed and announced by President Faustin-Archen Tuadera, will make CAR the first African country to take such a step. The country has long been in financial difficulty and is usually considered one of the poorest countries in the world. We hope that this move to make Bitcoin a fiat currency will give digital assets the opportunity to shine and promote financial inclusion and independence, which is often advertised by enthusiasts.
ARK36 trader Christos Crokides took the time to comment on this development, saying:
“The adoption of Bitcoin continues to survive geopolitical or financial global issues. Even in such uncertain times, the Central African Republic (CAR) is moving towards a global digital transformation. We have adopted Bitcoin as a fiat currency that represents yet another big step. This initiative is CAR’s digital infrastructure, which is currently considered undeveloped by applying the blockchain innovations needed to implement the project. It will completely transform the structure. “
Nepalese authorities label cryptographic activity “illegal”
In Nepal, on the other hand, regulatory agencies take a much stricter approach than the Central African Republic.recently communication Cryptocurrency-related activities, including the purchase / sale of digital assets such as Bitcoin, have been deemed banned within the border by the Nepal Rastra Bank (NRB) and the Nepal Telecommunications Bureau (NTA).
This decision is not entirely surprising, as a small country in Nepal lies between China and India. Both are influential countries with major economies that have already shown contempt for non-state-operated digital assets such as Bitcoin.
The NRB and NTA indicate that this stance and its consequent decisions were made due to potential fraud and anti-money laundering concerns.
Panama approves bill on cryptocurrency treatment
In the short term, many have noted that Panama could become the next country to take a major step towards making Bitcoin a fiat currency. This has not happened, but the Panama government has passed a bill known as the “Panama Cryptography.”
Under this new “Panama Cryptography”, digital assets are now freely available as a means of payment, with no capital gains tax requirements. Interestingly and promisingly, Panama Cryptography has been extended to include NFTs and various forms of asset tokenization, as well as allowing the benefits mentioned above.
The bill was passed with the aim of making digital assets available to businesses and investors alike, with a very positive vote of 40-0. The bill is expected to be enacted soon, as no major changes will be offered in the near future.
Ransu Salovaara, CEO of Likvidi, said: “The passage of a bill regulating the use of cryptocurrencies in Panama is an interesting development in the global use of cryptocurrencies. This new bill will allow digital asset companies to be based in Panama, which is a foreign source. There is no capital gain tax as it is classified as income. Panama has always been very important to trade and this new bill has not yet been enacted, but it is very important not only in Panama and the United States. But the country it trades in. “
New York Passes Moratorium in PoW Mining
To conclude our thoughts on recent regulatory developments related to digital assets, we look at the New York State Legislature, which has just passed. Specification Establish your own “… a moratorium on cryptocurrency mining operations that validate blockchain transactions using proof-of-work authentication methods.”
Please note that this is not a ban, but a moratorium that requires affected parties to comply with a set of temporary new restrictions. In this case, the bill stipulates that the Proof-of-Work (PoW) miner would be: “… subject to a complete general environmental impact statement review.” Those considering existing mining operations and the use of sustainable energy sources are exempt from this requirement.
As Bitcoin grows in popularity and the mining industry thrives, critics and enthusiasts all recognize that they have to do something about the environmental impact of their networks. Many are looking to coal-based power sources because miners are motivated to look for the cheapest electricity possible. This is especially true in developing countries where hydropower dams, solar, wind and even tidal power are inaccessible. This issue is so much talked about, like the Bitcoin Mining Council, which is made up of various influential and like-minded market participants who are trying to facilitate the transition to Bitcoin sustainability. A group has been formed.
While the bill was undoubtedly enacted with the best intentions to prevent the continuation of climate change, many believe it will hurt the rapidly evolving digital asset sector in the United States. It is speculated that as the new burden of the environmental impact statement is placed on the miners, many may consider this process too burdensome to just install elsewhere. increase.
How did the market react?
Looking at the development of regulations surrounding digital assets on a global scale, it is easy to imagine that the sector is thriving and prices have been pushed to record highs. Unfortunately, this is not the case at this time. Yes, there are various promising indicators of a clear bright future – forex reserve decline, adoption, usefulness, etc. – in reality, ongoing world events continue to curb short-term optimism. ..
Hash rates continue to be the bright spots surrounding the Bitcoin network. It continues to reach record highs and is already further strengthening the world’s most secure decentralized network.
Fear and greed
If you stick to the old saying “Be greedy when others are afraid, and afraid when others are greedy.”Then, now may be the perfect time for “Stack Sat”. The popular “Fear & Greed Index” regularly posted values indicating “extreme greed” before the market fell in the last few months, when Bitcoin fell about 40% from its all-time high.Fast-forwarding towards the present, market uncertainty has now brought about “extreme fear”
So what does this mean for Bitcoin and the price behavior that surrounds the entire market? After several months of steady decline, lateral movements are prolonged. Looking to the future, interested investors want to know – will Bitcoin collapse upwards as its usefulness and perception as a hedge against inflation grows? Or will investors continue to define Bitcoin as a risk-on asset and sell their holdings in fear of the consequences of global events? While market participants are waiting for a response, the world’s top digital assets will remain in the range of approximately $ 38,000 to $ 41,000.