Digital ruble vs SWIFT and fines for illegal DFA issuance. Key events of the week

Bitcoin exchange rate has fallen by 0,63% over the past seven days. The asset reached the highest values on June 21, when 1 BTC was trading at $21 723, the lowest values were registered on June 18 — $17 622 per coin. The bitcoin exchange rate is $20 875 as of June 24, 09:40 UTC (according to Binance).

The value of the second most capitalized cryptocurrency, Ethereum, has risen 5,21% in the past seven days. The native token of the cryptocurrency exchange Binance (BNB) added 6,54%.

The total capitalization of the crypto market increased from $921 billion to $971 billion during the week, with bitcoin dominating 41%. Ethereum's share is 14,3%.

Digital ruble and crypto regulation in Russia

In spring 2023 the Bank of Russia will test the digital ruble in real estate transactions, regular transactions, and payment upon receipt of goods. Representatives of the regulator explained that the digital ruble will increase the security of transactions and allow to track the intended use of funds.

The first phase will begin in April 2023. It involves testing scenarios that automate the interaction between citizens and businesses using a digital ruble. The Bank of Russia added that the legislative and regulatory framework for the circulation of the digital ruble is also being prepared in parallel with the testing of the platform.

In the second phase, the plan is to integrate the asset into smart contracts. This technology will allow tracking of the movement of funds. It is primarily aimed at state payments and subsidies in order to increase the transparency of transactions and eliminate the possibility of misuse of budget funds. All settlements will go directly from the digital ruble wallet at the Central Bank, rather than through the Treasury.

The implementation of the digital ruble into the domestic financial system and ensuring cross-border interaction with digital currencies of other countries will replace SWIFT amid Russian institutions’ disconnection from this international system. This opinion was expressed by Olga Skorobogatova, First Deputy Governor of the Bank of Russia.

She also noted that a roadmap for implementing the digital ruble will be developed by the end of 2023. 12 banks are now in the pilot group to test the asset on real transactions and customers: SberBank, VTB Bank, Gazprombank, Alfa-Bank, Bank DOM.RF, Rosbank, Promsvyazbank, Tinkoff Bank, SKB-Bank, Ak Bars Bank, Transcapitalbank and Bank SOYUZ. Skorobogatova added that three more banks, as well as several non-financial institutions, want to join the program.

On June 22, Chairman of the Committee on Financial Markets of the State Duma Anatoly Aksakov introduced in the lower house of Parliament a bill, according to which there is administrative liability for persons who illegally issue and exchange digital financial assets (DFA). Individuals or operators of investment platforms, who are not included in the register, will face a fine. For individuals it will be from 3 000 to 5 000 rubles, for officials — from 20 000 to 30 000 rubles and for legal entities — from 700 000 to one million rubles.

If individuals, including officials, refuse to comply with digital rights legislation when making transactions with digital assets, they will be fined similar amounts. For legal entities, the fine will range from 500 000 to 700 000 rubles. The limitation period for bringing to justice is one year from the date of the offense.

Development of the Terra collapse situation

A class action lawsuit was filed against the head of Terraform Labs (TFL) Do Kwon in the US District Court in Northern California. He is accused of selling unregistered securities as well as making false statements about the stability of the TerraUSD (UST) algorithmic stablecoin. The plaintiffs are seeking full recovery of investment losses.

The list of those who filed the lawsuit includes cryptocurrency hedge fund Three Arrows Capital (3AC), as well as Jump Crypto, Jump Trading, Republic Capital, Republic Maximal, Tribe Capital, DeFinance Capital, DeFinance Technologies, and GSR Markets.

The South Korean authorities banned the main developers of Terra from leaving the country. For example, law enforcement officials imposed a travel ban on a certain citizen A, according to whom Do Kwon was illegally selling cryptocurrency to companies in order to make large profits. The prosecutors wondered whether the funds raised in this way were used to artificially inflate the price of LUNA.

According to the preliminary results of the South Korean law enforcement investigation, Terra's collapse may have been the result of the company's own actions, since the wallet whose transaction was followed by the collapse of the ecosystem was actually maintained by TFL. The company is also accused of laundering $4,8 million through a local shell firm that allegedly provided blockchain consulting services.

Stablecoin news

Tether Chief Technology Officer Paolo Ardoino announced the company's intentions to conduct a full audit of the reserves of its centralized USDT stablecoin. He also noted that the MHA accounting firm is currently confirming the reserves backing USDT on a quarterly basis. Ardoino added that the collapse of the Terra ecosystem and its UST algorithmic stablecoin could accelerate the advent of a regulatory framework for stablecoins.

Tether will launch a stablecoin, GBPT, pegged to the British pound in early July. The asset will initially be available on the Ethereum network. GBPT will become Tether's fifth fiat-pegged stablecoin after USDT (US dollar), EURT (euro), CNHT (yuan) and MXNT (Mexican peso).

Analysts at the VEB.RF Institute for Research and Expertise proposed the issuance of a gold-backed stablecoin in Russia. The asset will be intended for external settlements, including between third countries without Russia’s participation. According to experts, economic sanctions cannot be applied against the “golden ruble,” as the currency rate will be pegged to the rate of gold on the world market.

Analysts also suggested creating a national cryptocurrency exchange or implementing a mechanism to work with digital assets on exchanges in friendly countries, which could be used by the largest companies included in the sanctions lists.

Development of the situation around Celsius

On June 13, Celsius, a DeFi cryptocurrency lending and staking platform, suspended withdrawals, exchanges and transfers between customer accounts, citing “extreme market conditions.” Then securities regulators in five US states began investigating the situation. The Texas agency called its investigation a priority because the lack of users' ability to get instant access to their assets could lead to “significant financial consequences.”

On June 14, Celsius hired lawyers to restructure the company, and on June 15 it brought in specialists from investment bank Citigroup to find new sources of funding.

On June 18, BnkToTheFuture co-founder and Celsius investor Simon Dixon proposed a plan to restore the platform, involving “financial innovation” that was used in 2016 to save the Bitfinex crypto exchange from liquidation. Dixon said he could not disclose details of the proposal until the platform's board accepted it. On June 20, Celsius suspended communication with the community through AMA sessions and Twitter Spaces audio rooms.

On June 21, the price of the platform's native token CEL rose 933%. According to Santiment analysts, after Celsius' client funds were frozen, traders had no interest in the token for ten days, while “big shark and whale addresses were accumulating in a big way,” which contributed to the rise in value. As of June 24, 09:40 UTC, CEL is trading at $1,04, having gained 14,35% in 24 hours, according to Binance.

Also after Celsius funds were frozen, sales of Ledger's hardware cryptocurrency wallets increased 4,5 times.

New predictions for the bitcoin exchange rate

Senior commodity strategist for Bloomberg Intelligence Mike McGlone considers possible occurrence of the new deflationary period in the financial sector as a result of which bitcoin and gold can benefit. The analyst explained that a sharp drop in risky assets could turn into a deflationary phase, which would boost the price of BTC, precious metal and US bonds.

Gareth Soloway, chief market strategist at InTheMoneyStocks.com, said that bitcoin would face a further correction below $20 000, despite signs of a recovery above that level. In his opinion, the next likely downside target for the asset will be $12 000, but the analyst also allowed for a correction below $10 000.

Ethereum co-founder Vitalik Buterin criticized the Stock to Flow (S2F) model for predicting the bitcoin rate created by anonymous crypto analyst PlanB. According to him, this financial instrument is harmful because it gives a false sense of certainty that the price of the asset will rise.

The co-founder and former head of the cryptocurrency exchange BitMEX, Arthur Hayes, shared his assumption as to what may have influenced bitcoin to fall to a local low of $17 600 on June 18. He noted that by the close of the trading session on June 17, the bitcoin-ETF of investment firm Purpose brought 24 500 BTC to the exchange, leading to increased selling pressure. That, Hayes said, could have led to the launch of stop-loss orders, which automatically sell assets when quotations fall to a certain level.