The lifting of Russia’s cryptocurrency ban and other key events of the week
Meta’s shares fall, mining regulation and a detailed analysis of digital assets in Getblock’s review
04.02.2022 - 13:10
The bitcoin exchange rate has ranged between $36 000 and $39 000 all week, failing to break the $40 000 target. As of February 4, 2022, the cost of one coin is $37 890 (according to the CoinMarketCap portal), which is about 2,45% more than last Friday.
The second cryptocurrency, Ethereum, on the contrary, managed to recover from a drawdown and posted an impressive 16,07% increase. The value of 1 ETH on Friday, February 4, is $2800. The native token of the Binance cryptocurrency exchange remained relatively stable, losing just over 2,2% in a week.
The total capitalization of the crypto market rose from $1,656 trillion to $1,756 trillion during the week, with bitcoin dominating at 40,9%. Ethereum’s share is 19%. As can be seen on the infographic of the Coin360 portal, most of the assets are in the green zone.
Cryptocurrency ban lifted in Russia
Since the beginning of the year, the Russian authorities have been engaging in heated discussions about the fate of cryptocurrencies and their regulatory options. But the recent events show that predictions of a complete ban on the industry are not fated to come true. The market is waiting for the introduction of full-scale regulation, and here are the options proposed by the relevant departments.
Firstly, the government intends to determine the status of all market participants, including the division of investors into qualified and unqualified. Secondly, mandatory registration and reporting will be introduced for digital asset companies. Thirdly, administrative and criminal liability will be introduced for offenses involving cryptocurrencies.
Cryptocurrency mining may be equated to entrepreneurship
On February 3, Sergey Katyrin, head of the Chamber of Commerce and Industry of Russia, came up with an initiative to equate cryptocurrency mining with entrepreneurial activity. In his opinion, this will help to bring this area out of the grey zone, protect power grids from overloading and attract additional funds to the budget.
If such a proposal is adopted, the miners will be required to register their activities, pay the appropriate taxes, and receive electricity at a higher rate than ordinary users.
The authorities have already calculated the possible revenue from the introduction of mining regulation and the crypto industry in general. This figure is currently estimated at 152 billion Russian rubles per year (about $2 billion).
What is going on in the CBDC world
The national digital currencies of central banks are actively developing. India may introduce into circulation the digital rupee as early as 2022-2023. This was stated by Finance Minister Nirmala Sitharaman. According to her, CBDC will be a trigger for the development of the country’s digital economy. Among the key benefits of the asset are lower transaction costs and higher tax revenue.
Unlike their Indian counterparts, the Japanese authorities are in no hurry to launch a national digital currency. According to Haruhiko Kuroda, Japan’s central bank Governor, the authority is still undecided on the feasibility of issuing a digital yen.
The regulator will actively monitor the experience of neighboring China, which will test the digital yuan at the Olympics. Only by 2026 Japan will decide on the options for issuing this type of asset.
Meta’s shares fall and the issue of bitcoin volatility
On February 3, the share quotes of Meta (Facebook) plummeted by 23%. The main reason is analysts’ dissatisfaction with the company’s financial results for the fourth quarter of 2021. It is noted that Meta’s net profit decreased by 8% and the number of daily active users fell by 1 million people (compared with the fourth quarter of 2020).
Another factor affecting the share price was the news of the company’s refusal to issue its own stablecoin. Meta plans to sell the cryptocurrency project, Diem, for $200 million. The main reason for the closure is the position of global regulators, who were strongly opposing the registration and launch of this product by Meta.
Such a large drop in the share value caused a heated discussion on the part of the crypto community. The users are wondering if bitcoin is as volatile and if it can fall by 23% in a moment, as Meta’s shares have done in the stock market. The crypto enthusiasts believe that bitcoin is more profitable, especially given its gradual adoption (example: El Salvador) and the limited issuance that makes it a deflationary asset.
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