Alexander Lukashenko, the Belarusian president, has signed a new decree to expand his country’s regulatory framework regarding cryptocurrencies. This will enable the Belarus High-Tech Park ( TTP), the body that oversees the country’s crypto space to create a registry for addresses of crypto wallets that can be used for illegal purposes.
In an announcement , the president’s press office stated that the goal of the legislation is to “protect participants in digital asset markets from loss of property” and “prevent unintentional participation in activities prohibited under law,” . Decree No.48, “On the register (identifiers of virtual wallets) and features of the cryptocurrency circulation”, is dated February 14, 2022. Lukashenko’s administration also stressed:
Belarus continues to develop the legal framework for digital asset regulation. It allows digital currency free circulation, which is a rare feature among other countries.
Officials in Belarus believe that this requires constant monitoring and, when necessary, clarification and supplementation of regulatory norms. This includes measures to stop the financing of prohibited activities, which was the primary reason for the adoption the most recent crypto decree.
If law enforcement agencies receive information that the wallet addresses are being used to conduct illegal operations or to facilitate transactions related to extremism or terrorism, they will add them to the register. Authorities can also use the assistance of other cryptocurrency platforms and exchanges to seize crypto assets.
Minsk’s government will have three months to comply with Lukashenko’s order, which will then be in force. A 2017 presidential decree legalized crypto activity in Belarus. It was implemented in May 2017 and provided tax breaks and incentives to crypto-businesses.
The Belarusian head-of-state hinted last March at tightening industry rules, citing China as an example. However, HTP officials later stated that authorities don’t intend to adopt any stricter regulations. This month, it was reported that Belarus plans to permit investment funds the acquisition of digital assets.
According to Chainalysis’ Crypto Adoption Index, which tracks blockchain analytics firm Chainalysis’s crypto adoption index, cryptocurrencies can not be used in Belarus for payment purposes. However, Belarus is third in Eastern Europe for crypto adoption. This is largely due to strong peer to peer activity. The region’s top two spots are held by Russia and Ukraine, both former Soviet republics.
Bitcoin closed the first month in 2022 with a negative note. The worst start to the year since the beginning of the 2018 “crypto winter” was January, which saw back-to-back falls. The’red line’ for February indicates a further decline. Experts predict that Bitcoin’s price will continue to rise despite the current crisis. This is expected to result in Bitcoin’s incredible year. It is predicted that Bitcoin will reach US$100k by Q2 2022. The experts also predict that BTC will rebound to US$50k within the first quarter.
Bitcoin was the first cryptocurrency to hit the virtual marketplace. Although there are many mysteries surrounding Bitcoin, it remains the most popular crypto asset. Bitcoin’s value has reached new records every day since 2020. The cryptocurrency has experienced a few bearish periods and slumps, but overall it recorded remarkable growth over the past few years. Unfortunately, Bitcoin is currently in a negative phase.
The cryptocurrency has been trending downward since November 2021 when it reached an all-time high at US$69,000 2022 began on a very bad note, with Bitcoin close to touching its psychological resistance level of US$30,000. Surprisingly, January saw only 11 days of growth for the cryptocurrency, meaning that it has spent more than 65% of the month in decline. Other altcoins such as Ethereum, Solana and Cardano also suffered from a downturn. Even though the market is looking very unsettling, experts still believe Bitcoin could be making a comeback and reaching a record-setting high in Q2 2022.
Why Bitcoin Crash
Although there are many factors that contributed to Bitcoin’s fall, the primary reason is the market uncertainty triggered by the Federal Reserve’s announcement towards the end 2021. The Federal Reserve announced plans to raise interest rates and tighten regulations. Many investment options, including cryptocurrency and the S&P 500, were hit hard by this announcement. Even tech stocks are experiencing constant declines.
However, there are also countries around the world that have developed regulations and new measures in order to reduce cryptocurrency use. The Central Bank of Russia proposed that cryptocurrency trading and mining in Russia be banned. The UK and Europe are also working together to create a new regulatory framework. Even countries such as Singapore, which were previously very quiet about cryptocurrency usage, are now urging governments to put restrictions in place. The Indian Finance Ministry announced recently that all cryptocurrency profits will be subject to a 30% tax.
Crypto Winter and ‘Correction Phase
There has been much concern about a coming ‘crypto-winter’ due to the steady falls and sharp selloffs in the digital currency markets. The crypto winter is a significant bear market in digital currency history. It occurred in 2017-2018, when Bitcoin prices plunged as high as 80% from their all-time highs. Some believe the so-called “crypto winter” has already come, but enthusiasts view this period as a correction’ time.
The fall will be more severe if Bitcoin is considered a ‘crypto winter” asset. BTC will reach US$15,000. If it experiences a price drop of more than 80%, then that would be a major problem. However, this is not the case right now. It has experienced a 30%-50% decline, which suggests that the cryptocurrency is in correction territory. There is no guarantee that Bitcoin will make a comeback, but there aren’t any guarantees about the claims. It is a sign that things are really out of control if it drops below the US$30,000 resistance and remains there for more than a week.
Is BTC’s price at a new record in Q1?
Bitcoin’s performance is heavily dependent on its network activity. This will be the guiding light for the remainder of the year. BTC must undergo a huge correction to reach US$100k by Q1. It did so in 2017. To reach the resistance level, Bitcoin must rise 110% from its current price. It is possible, even though it seems impossible right now. However, it has been done in the past.
Bitcoin Priced at US$100k for the Second Quarter
Bitcoin struggles to overcome the US$100k barrier. People believed that Bitcoin would reach this psychological level easily by the end of 2021. The cryptocurrency market plunged into darkness and things turned around. Experts in cryptocurrency predict that BTC will make a sharp correction in Q1 and hit US$100k in quarter two.
Russians have invested 5 trillion rubles, or around $67 billion, in crypto. Some of these people may lose all their money as cryptocurrencies aren’t backed by anything, Anatoly Ashakov, a deputy who plays a crucial role in Russia’s regulation of the crypto space, recently stated. These people are not qualified investors, so pyramid schemes are possible, said Aksakov, who is the head of the Financial Market Committee at State Duma.
In an interview with Duma TV, the Russian lawmaker reiterated previous warnings and stated that the market for digital currency is unstable. Aksakov pointed out that crypto prices can move quickly by 20-30% in any direction.
It is therefore important to regulate the cryptocurrency market to protect our citizens and to provide taxation as well as certain rights to owners of cryptocurrency. They must however be identified.
This statement follows a similar call made by Alexander Bastrykin, the head of Russia’s Investigative Committee. Bastrykin, who answers directly at President Putin, stated last week that cryptocurrency should not be anonymous and suggested that mandatory identification for all crypto users in Russia should be established.
Anatoly Aksakov believes that crypto holdings should be reported to the government to stop their misuse to finance terrorist financing, drug trafficking and weapons acquisitions. He also mentioned taxation. While Russians are required to pay taxes on crypto profits under current legislation, a separate law on crypto taxation has yet to be passed by the Duma.
High-ranking members of the House also spoke out about the need for regulation of cryptocurrency mining. This is a lucrative business that has spread in Russia and a source of income for private citizens.
Aksakov stated that, if Russian authorities decides to legalize mining it should be registered and taxed. He also argued that different tariffs should be applied to the energy used by mining companies in accordance with Russia’s cross-subsidization program. This would result in higher electricity rates for miners.
Sergei Mironov (leader of Aksakov’s ‘A Just Russia-For Truth’ social-democratic group) urged Bank of Russia last month to legalize cryptocurrency markets and speed up the introduction of the virtual ruble. He believes that the regulator’s strict stance in the matter hampers the development and makes crypto technology dependent on Western payment system.
Many aspects of cryptocurrencies, such as mining, trading, and taxation, are still unregulated in Russia despite the January 2021 law “On Digital Financial Assets”. The Duma has set up a working group to prepare regulatory proposals.
In Kazakhstan, authorities are considering implementing a decade-old plan for building a nuclear power station ( NPP). This is to address the country’s growing electricity shortage. The former Soviet republic attracted many Chinese miners to the country, despite having capped tariffs in place and a crypto-friendly attitude. This was due to Beijing’s offensive launched in May this year. Some of them have since left the country, as their hardware is idle.
According to Magzum Mirzagaliev, Kazakhstan’s Energy Minister Magzum Mirzagaliev, two locations are being considered as possible sites for a new nuclear station. These include the Alma-Ata’s village of Ulken and the East Kazakhstan city of Kurchatov. Mirzagaliev, a Russian news agency Tass, elaborated:
We have the production and consumption balance in place until 2035. We see the necessity to build a nuclear power station to supply electricity to our people and economy.
Kazakhstan is a world leader in uranium mining. It has been contemplating building a nuclear power plant for more than a decade. Mirzagaliev acknowledged that it will take another ten years to build it. Now, the government of Nur-Sultan has been in discussions with Russia’s State Atomic Energy Corporation Rosatom. This corporation has built NPPs in China and India as well as Belarus. According to the official, the nuclear power plant will help Kazakhstan achieve its carbon neutrality goals for 2060.
In the third quarter of 2018, the country experienced electricity shortages due to the influx of Chinese miners. The country’s energy-hungry data centres were quickly criticized for the electricity shortages. Authorities estimated that one crypto farm requires as much as 24,000 homes to generate enough energy. To fill the deficit, Kazakhstan, a major source of fossil fuels, had to purchase expensive electricity from Russia.
The attitude of Kazakhstan towards crypto has been generally positive. It has welcomed crypto miners and taken steps to regulate this sector. Recent estimates show that crypto mining could bring in $1.5 billion to the country’s economy over the next five-years. Tax revenue is expected to be more than $300 million. In January, a $0.0023 fee will be levied for each kilowatt hour of electricity that registered mining companies use.
Russian citizens have exchanged 5 trillion of their national fiat (over $67.5billion) for cryptocurrencies, according to a member of the State Duma. The information was not disclosed by him but he did not specify a time period. Anatoly Aksakov, head of Financial Market Committee, stated this Monday during hearings in the Russian lower house.
Some reports claim that 5 trillion rubles has been invested in cryptocurrency by Russians.
Russia has yet to fully regulate Bitcoin and other digital assets. The law “On Digital Financial Assets”, which came into effect earlier this year, only introduced rules for a few related activities, such as coin issuance. However, key areas like mining and taxation are still outside the reach of Russian legislation.
Aksakov noted that investors and ordinary Russians have been interested in the crypto market. According to the Tass news agency he also stated that it was time for Moscow authorities to make a decision in this regard. He elaborated:
It is important to decide how we will treat this phenomenon.
According to media reports , Russian government institutions have differing views about how to regulate cryptocurrency. Aksakov, quoted by Interfax, stated last week that a variety of approaches are being considered and weighed. These range from legalizing crypto investments and trade to imposing a blanket ban.
Reuters reported that the Central Bank of Russia (CBR) is considering prohibiting crypto purchases, despite its current position of ‘complete rejection’. Elvira Nabiullina, Governor of Russia, reiterated her skeptical attitude toward crypto and insists that Russia’s financial infrastructure shouldn’t be used for crypto transactions.
Other officials also voiced their opinion on the subject. Alexey Moiseev , Deputy Finance Minister, stated in October that Russia is not planning to follow China’s lead and prohibit its citizens from purchasing cryptocurrency abroad or keeping it in crypto wallets based overseas.
Estimates cited by Bank of Russia in their recently published Financial Stability Overview Q2 and Q3 of 2020 showed that Russians make around $5 billion annually in digital currency transactions. The monetary authority noted that cryptocurrency transactions pose risks to investors and financial stability in Russia.
Landsvirkjun, Iceland’s largest utility has been forced by the government to restrict energy supplies to industrial customers, including fish processing plants and aluminum producers. Consumers with short-term curtailable contracts were also affected. The company has been refusing new bitcoin miners and data centers that mine digital currencies.
Bloomberg reported that Landsvirkjun explained why the reduction was necessary citing a problem at a power plant and low water levels. A delay in sourcing electricity from an outside producer also caused problems for the supplier. On Tuesday, the utility announced that the cuts would be effective immediately.
Tinna Traustadottir (executive vice president of sales, customer service and sales at Landsvirkjun) noted that the deficit has also been influenced by an unusually high demand for electricity. While Iceland’s huge smelters have been a significant consumer for many decades, a growing number cryptocurrency miners attracted to the island’s low energy are also playing a part.
Among the crypto mining companies that have already established coin minting facilities in the country are the Canadian Hive Blockchain Technologies and Bitfury Holding, both listed in Hong Kong. Landsvirkjun stated that it is now refusing to accept new requests from the mining sector.
Further, the company explained that it could not serve load points at Karahnjukavirkjun, Iceland’s largest power station, due to Iceland’s distribution system limitations. The plant is in the country’s eastern region, while the island is predominantly the one with deficits.
News of Iceland’s electricity problems comes after Norway and Sweden, two Nordic countries, expressed concern about rising energy costs and the growing environmental impact of cryptocurrency mining. In November, Swedish regulators demanded an EU-wide ban of crypto mining. A few weeks later, the Norwegian government stated that it might support Sweden’s proposal.
Bloomberg reported that El Salvador is exploring bitcoin further and intends to issue sovereign bitcoin bonds.
According to the report, the country will issue $1 billion worth of tokenized U.S. dollar denominated 10-year bonds that pay 6.5% through Liquid Network.
The funds will be converted into bitcoin for half of the amount. According to the report, half of the funds will go towards infrastructure and bitcoin mining.
According to the report, after a five year lockup, the government will sell its bitcoins and pay additional dividends to investors.
Blockstream, a software development company, stated that at the end the 10th anniversary of the bond, the annual percentage yield will be 146% due to the anticipated bitcoin appreciation.
Blockstream Chief Strategy Officer Samson Mow stated that the lockup period will remove $500 million worth of bitcoin from the market for five year, which will increase the tokens’ scarcity as well as value.
According to the report, El Salvador will also build “Bitcoin City”, which will be exempt from income, property, and capital gains taxes. For the construction of the city, and other services, the only tax will be a 10% value added tax. Conchagua volcano will be the site of the city. It is hoped that the volcano will be used to generate energy for mining.
According to Mow, El Salvador wants to be the financial center of the globe. He said that he believes other countries will start to notice. According to Mow, countries that replicate El Salvador’s efforts will enjoy a massive advantage’ while those who don’t will feel ‘bitcoin FOMO’, or the fear of missing out,
User complaints in El Salvador were increasing last month. Users fell prey to scammers and lost a lot of money. Other failures include incompatibility of other wallets, and other technical issues.
Peter Thiel, tech billionaire and tech billionaire, said bitcoin’s sky high price is a sign of a ‘crisis’ in the economy due to inflation. Inflation has risen to a 13 year high in the US.
According to Bloomberg, he stated that $60,000 worth of bitcoin was too much for him and that he wasn’t sure if he should buy aggressively. “But surely, it’s telling us that we’re in a crisis moment.”
Thiel stated that the US Federal Reserve believed it could launch massive stimulus without driving up inflation. However, it isn’t taking the issue seriously. Thiel said that he wishes he had purchased more bitcoin and added that he believes inflation is here to stay.
Bitcoin enthusiasts argue that it is “digital gold” – a rare asset that will retain its value even during high inflation.
Bitcoin reached a record high above $66,000 October due to investors’ concerns over sharp price increases across the globe.
The US consumer price index inflation hovered around 5.4% in September, a record high for the year. This was due to an economic rebound from coronavirus that pushed up food prices and energy prices.
JPMorgan stated that in late October, it appeared as though investors were buying into digital gold. The bank’s analysts stated in a note that they believe bitcoin is a better inflation hedge than gold.
Many institutional investors remain skeptical about the inflation hedge argument. They believe bitcoin’s volatility makes it too risky to be added to portfolios.
Bloomberg reported that Thiel stated that the Fed, which has said for years it expects price increases to fade, is being too close-minded about inflation, and failing to acknowledge the problem.
This billionaire was among the first to invest in Facebook, and is also a co-founder at PayPal and Palantir.
He supports cryptocurrencies and has supported companies such as Bitpanda, an European digital asset exchange.
China’s massive crackdown on cryptocurrency has caused chaos. China was a key participant in the new financial ecosystem. Beijing’s actions may be the beginning of a wider regulatory crackdown against cryptocurrencies and crypto assets worldwide. This would be a shame. Although cryptocurrencies are not without faults, the technology behind them holds great promise.
China had previously banned initial coin offerings. This is the cryptocurrency equivalent to initial public offerings of stock shares by companies. The Chinese government then took steps towards limiting the use of crypto assets and cryptocurrencies by financial institutions. This latest move is even more expansive. All domestic cryptocurrency transactions are now banned. These transactions are possible in principle without the government’s knowledge. However, few Chinese citizens and financial institutions will be willing to take the government’s ire.
Beijing’s actions show how central banks and national governments are increasingly worried about cryptocurrencies destabilizing financial systems and other adverse consequences. They have every reason to be concerned.
Bitcoin, the original cryptocurrency, was once used to fuel illicit transactions on the dark internet and is now used to facilitate ransomware attacks payoffs. In the meantime, it has been revealed that Bitcoin is not a good medium for daily transactions. It is volatile and the Bitcoin network can’t process large volumes of transactions quickly or cheaply.
Instead, Bitcoin has become a speculative digital asset that is of no intrinsic value. Its scarcity is its entire value proposition. Bitcoin is issued by a computer algorithm that has a hard limit on the number of digital coins that can be issued. This is in contrast to fiat currencies, which central banks can print at will.
Governments are concerned by the possibility that households will channel their savings into crypto assets. This could make them more vulnerable to a burst of the speculative boom. China’s government is clearly against this. This is especially true given the fact that it is currently facing criticism for trying to reduce the housing market speculative bubble, which it once supported.
Beijing was also concerned about the impact of cryptocurrencies on its control over domestic payment systems. It has taken steps to crack down on Ant Financial and other tech companies that have dominated domestic retail payments. This has made central bank money less relevant. China is also wary of stablecoins, a new cryptocurrency that maintains stable value and is backed by fiat currency stores. These stablecoins could be used to make payments in addition to the fiat currencies.
Another concern was that stablecoins and cryptocurrencies could be used to bypass restrictions on cross-border financial flows. These controls have been relaxed in recent years. The government is concerned that unregulated flows could make it more difficult to control the renminbi’s exchange rate. China attempted to curb capital outflows in 2015-16 to stop a sharp depreciation of its currency. However, Bitcoin demand from China soared during this time, as people used the cryptocurrency to escape the government’s control and take money out of China. Beijing sees cryptocurrency as a conduit for capital control evasion.
China has also taken aim at Bitcoin mining. This is a process in which huge amounts of computing power are used to validate transactions on the cryptocurrency network in return for Bitcoins. Because of its easy access to cheap energy and high-quality hardware, such mining has been a growing trend in China. This makes it the world’s largest center for this type of activity. Both the environmental impact of such mining in terms energy consumption and computer debris have been huge. The country is currently experiencing a power crisis as it attempts to reduce its dependence on nonrenewable energies. Bitcoin mining was clearly not going to be tolerated.
Despite all these flaws, blockchain technology which underpins Bitcoin may actually have many benefits. This technology has already been used in finance. The technology will soon allow for a wide range of transactions, including the purchase of a house or car without traditional intermediariessuch lawyers and real-estate brokers. The emergence of cryptocurrency has also prompted central banks to design digital variants of their fiat currencies. China has already started such trials. Japan, Sweden, and many other countries have already started such trials.
It is uncertain what the future holds for cryptocurrencies as financial assets. However, the revolution they started will make it possible to make low-cost digital payment easily accessible. If these new technologies are allowed to evolve further, they will also help expand access to basic banking services and financial services for all income levels, including those with low incomes and those who are not served by existing financial institutions.
The Chinese crackdown on cryptocurrency advocates is a lesson for them to learn. Instead of resisting regulation and oversight or claiming technology will allow the industry’s police to take control, advocates for cryptocurrency should work with regulators and governments in creating effective regulation. The industry will then benefit from increased legitimacy and stability.
I know people who see bitcoin’s price and think, “Damn, I missed that.” I’m late. They are attracted to altcoins that are cheaper, but will eventually lose their value. They believe that coins selling for less than $1 are going to be the next bitcoin. There isn’t a ‘next Bitcoin’. Bitcoin is a historical accident. It was and still is a lot like our ancestors discovering fire. Let’s look at the early internet for context.
Only a few people had internet access in the 1990s. The internet was a strange thing back then. It was a new phenomenon that few people knew about. Few people could have predicted the rise of social networking, social media and online conferencing. That’s where Bitcoin is at the moment. It is still very, very early. Because so many people don’t know about all the developments and what’s being built on Bitcoin right now, it is especially important.
Layer 2 solutions are those that build on top of Bitcoin blockchain. The Lightning Network is one such project. It now has 14,000 nodes and 68.300 payment channels. This network spans across six continents (sorry Antarctica). Layer 3 solutions are the decentralized apps being built on top the Lightning Network. The goal is to create a new peer internet. One that isn’t subject to the control or censorship of Big Tech. It realizes the original internet ethos.
We are now seeing the first glimpses of projects using the infrastructure built by companies like Impervious. These will allow people to call Lightning nodes or monetize any service that is not financed with a Lightning bank account.
We are witnessing an early stage of evolution. It’s still early days of an evolution. Bitcoin’s Layer 1 settlement layer has been the most valuable store of value. nations have adopted it as legal tender, thereby abandoning the U.S. dollars’ global dominance. The Lightning Network has been the best exchange. We now have Layer 3 decentralized apps. These are the companies of tomorrow. Bitcoin is now more rare than it really is because of the functionality that it offers.
Bitcoin is almost as popular today in terms of adoption as the internet was back in 1997. Bitcoin is growing faster than the internet. We could very well see more than one billion users in the next four years, if this trend continues.
A single bitcoin’s price movement is just noise. It doesn’t really matter at what price you buy. It doesn’t matter what price you buy. Individuals and groups that are smarter than I see the current price as a blip. We are on the way to $1,000,000 per coin by using PlanB’s’stock-to-flow_’ model. It’s like worrying about Amazon and Apple’s share prices in the 2000s that we worry about where our coins are trading now. We’re just getting started. The Lightning Network continues to be strong.
These are exciting times. It’s an honor to have witnessed the evolution of the internet from its inception to today. It’s not too late to participate in Bitcoin’s evolution.