Cryptocurrency and blockchain saw significant regulation and development movement in the US, as well as majorly innovative news from around the world this past week. As a recap and to provide an up-to-date and comprehensive overview of the latest news, the Hodler’s Digest presents what happened in crypto from July 23-29.
1. US Crypto Bills in Motion
As cryptocurrency continues to become more widely accepted, legislators are debating the possible US regulations for digital assets. Over the past few months, a handful of crypto-focused bills have made their way across the congressional chambers.
The first bill, the Crypto-Currency Act of 2020 introduced in March, looks to create a comprehensive framework which would designate each type of crypto-asset and their corresponding regulations. If passed, the Act would:
- Create three distinct categories for crypto-assets
- Modify the existing securities laws with respect to crypto-assets
- Set regulatory guidelines for crypto-assets
The second bill, known as the STABLE Act, proposes creating more consumer protection in the crypto market. Under the legislation, issuing US dollar stablecoins would require US federal banking charter and FDIC insurance coverage.
- Stablecoins pegged to the US dollar would require federal approval
- The Federal Reserve or OCC would review all applications for these types of coins
- Issuers of US dollar stablecoins would need to follow consumer-protection laws
The third and most recent bill is the Token Taxonomy Act, which seeks to make it easier for the IRS to collect taxes on cryptocurrencies at the point of purchase. The bill also calls for a clarification of the current taxable status of crypto-assets.
- Tax exemption for cryptocurrency held less than a year
- Tokens used for purchases would be taxed like a security
- Capital gains would be taxed in the same way as a capital asset
2. Worldcoin Offers New Solution
Worldcoin has long been embraced as a solution for those looking to make cross-border payments securely and quickly. Now, it is coming to the fore with a new capability – the ability to transact in multiple currencies.
The platform allows direct transactions in 28 currencies, each with no risk of suffering the heavy volatility experienced in the crypto markets. This is achieved by basing the value of transactions on the underlying currency’s exchange rate online. All transactions, and their associated fees, are recorded on the Worldcoin blockchain and are always available.
With this new capability, Worldcoin provides businesses and other organisations with a convenient tool for accepting payments from across the globe, as well as providing a way to hedge against fluctuations in the exchange rate. With the ability to extend credit options to customers and send remittances abroad, Worldcoin gives users the power to remain competitive and deliver better service.
- 28 currencies, including international major currencies like USD, GBP, and EUR
- Prices reflected in the underlying currency’s exchange rate
- Negotiate better exchange rates through Worldcoin’s platform and features
3. Russia Reveals Plans for CBDC
Amid the rising demand for central bank digital currencies (CBDCs), Russia has recently revealed plans for its own version of a CBDC. The Bank of Russia is currently working on a project which is slated to be run on a distributed ledger technology-powered blockchain platform with enhanced security features. This makes Russia one of the first countries to explore a central bank-backed digital currency.
Lesnoy Digital Ruble
- Russia’s CBDC project will be called the lesnoy digital ruble – a name derived from the Russian word for “forest”.
- The lesnoy digital ruble will be subject to all the same financial rules and regulations as the ruble, and will be issued by the Central Bank of Russia.
- In terms of usage, it should provide consumers and businesses with the same features and benefits as traditional currencies, such as being accepted as a payment option for goods and services.
What’s Next?
- The Bank of Russia plans to roll out its CBDC in phases, starting in 2022. First, it will be tested with a small number of participants, before expanding it further and unrolling the digital ruble across the entire nation.
- The digital ruble’s underlying technology structure will be designed with security as its primary focus, so as to ensure that the currency is resilient against cyber attacks and other risks.
4. A Recap of the Week: July 23-29
July 23: The United Nations Working Group on Digital Cooperation held a meeting to deal with the need for international collaboration on issues related to technology; this is the first meeting of its kind and will lay the groundwork for future international cooperation.
July 24: Equity markets saw significant volatility following news that the U.S. Federal Reserve would cut interest rates. Stock indices around the world reacted, seeing gains and losses, while cryptocurrencies were largely unaffected.
July 25-29: Events and news this week had implications for different sectors around the globe:
- Retail reported quarterly earnings, with mixed results
- Consumer demand for luxury goods dropped in China
- The EU and U.K. failed to reach a Brexit deal
- Oil prices fell as inventories increased
- Investors turned to U.S. Treasuries in light of uncertainty
The week ended with markets cautiously optimistic as news from various sectors of the economy was mixed, suggesting that no major trends had emerged.
This has been the Hodler’s Digest for July 23-29, a week that has seen renewed interest in cryptocurrency regulation across the United States, the launch of a new coin in the form of Worldcoin, and revelations that Russia is looking to begin testing a central bank digital currency of its own. All of these developments are sure to have a major impact on the industry moving forward.