The rise of govcoins
Weekly round up of exciting blockchain and crypto developments
May 17 2021
Is Elon Musk the biggest winner in crypto market?
Tesla’s CEO Elon Musk has been talking about bitcoin, creating tremendous volatility in the cryptocurrency market.
On Sunday May 16, he implied in a Twitter exchange that Tesla have sold or may sell the rest of its bitcoin holdings, sending the cryptocurrency price tumbling. Earlier, in February, Musk sent bitcoin prices spiralling upwards when he revealed that Tesla had bought US$1.5 billion worth of bitcoin. But bitcoin lost favour with him last week because he felt bitcoin mining uses too much energy. Bitcoin dropped about five percent in the first minutes after his announcement that Tesla purchases using bitcoin would be suspended
In recent weeks, he seemed to favour the meme-inspired cryptocurrency, dogecoin, when his aerospace venture, Space X, announced that it would accept the coin as payment to launch DOGE-1 mission to the Moon. Of course, this pushed the price of dogecoin up.
The biggest winner here is Elon Musk. Link.
Binance under investigations by US agencies
Governments would prefer greater oversight of crypto exchanges to get a better handle on money laundering and tax offences. Binance has not escaped such investigations. Last week, Binance was in the spotlight when news broke that the US Justice Department and Internal Revenue Service are investigating it in efforts to root out illicit activity that has thrived in the red-hot but mostly unregulated cryptocurrency market.
While Binance has faced such probes by the US agencies in the past, it still spooked retail investors who are suddenly not so sure about using Binance services.
Experts and insiders say that such probes by US regulatory agencies as well as by other governments have been going on for a while. As a rule, many legit investors in the US do declare their crypto profits because US has a capital gains tax and also want to avoid trouble with the tax agency. Binance investigation, tax offence
Best read of the week
Bitcoin has become a US$1 trillion market cap. Fund managers are rushing to include it and other crypto in their portfolios. With payments, deposits and loans run by privately held digital realms, central banks will struggle to manage the economic cycle.
The special report by the Economist discusses the revolutionary digital transformation occurring at the nexus of technology and finance: the rise of “govcoins” that will completely bypass the traditional financial system.
Over 50 monetary authorities, representing the bulk of global GDP are exploring digital currencies. The EU wants a virtual Euro by 2025 and China has anongoing e-yuan pilot.
It is going to be a big financial tug of war between DeFi and CeFi. Link
Grace Chng can be reached at grace.chng1@gmail.com
