Enterprise blockchain to play a pivotal role in creating a sustainable future

Companies are turning to enterprise blockchain-based solutions to meet environmental sustainability goals as well as business demands.

Bitcoin (BTC) is often used to criticize all blockchain-based projects. This is understandable since Bitcoin was the first project to use a blockchain, is arguably the most recognizable and is the largest cryptocurrency by market cap.

In the first half of this article, I will use Bitcoin as a proxy for all blockchain-based projects because most people associate blockchain with Bitcoin. Anything environmentally positive that can be said about Bitcoin will be doubly true for the vast majority of newer blockchain-based projects since Bitcoin uses the oldest version of blockchain technology.

Blockchain energy consumption

Bitcoin has been attacked for high energy consumption. Headlines pointing out that Bitcoin’s electricity usage is comparable to a country’s total consumption is a popular critique. Comparisons are useful, but they can have a deceptive framing effect. For example, the statistics most often cited in these attention-grabbing headlines are taken from the Cambridge Center for Alternative Finance (CCAF). The same organization also points out that transmission and distribution electricity losses in the United States could power the entire Bitcoin network 2.2 times. Always-on electrical devices in America consume 12.1x more energy than the Bitcoin network.

So, the Bitcoin network uses as much electricity as a small country or far less than one sliver of America’s energy budget. Is that a lot? It depends on how you look at it.

Related: Is Bitcoin a waste of energy? Pros and cons of Bitcoin mining

Another often used critique is that Bitcoin’s electricity consumption is growing so rapidly that Bitcoin emissions alone could push global warming above 2°C, or consume all of the world’s energy by 2020. The latter didn’t happen. Why? First, like most network-based technologies, Bitcoin is following an adoption curve defined by the theory of diffusion of innovations — an “S curve.”

The explosive, exponential-like growth in the first half of the curve slows down considerably in the latter half. Second, large and predictable improvements in computer efficiency will continue to lower the energy cost of computing even as Bitcoin’s growth slows. Third, such predictions don’t take into account the evolving energy mixture of Bitcoin.

Blockchain energy mixture

Almost all of the energy consumed by blockchain projects come from electricity used by computers that secure the network. Bitcoin calls these “miners,” but newer blockchain projects can use much more efficient “validators.” Electricity is produced from many different sources, such as coal, natural gas and renewables like solar and hydroelectric. Those sources can create very different levels of carbon emissions, which largely determines their environmental impact. The two most prominent estimates of Bitcoin’s energy from renewables range from 39% in this report to 74% in this report. Either of these estimates is “cleaner” than America’s energy mixture, which is just 12% from renewables.

There is evidence that the public scrutiny to which Bitcoin has been subjected has most likely ensured that energy from renewables will only increase in the future.

Blockchain is worth it

Bitcoin’s energy consumption and composition are not perfect, nor is it as terrible as is often reported. What is often lost in the conversation over Bitcoin’s energy usage is whether Bitcoin’s use of energy is worthwhile. Plenty of industries require energy or produce massive amounts of waste, but most people deem the environmental costs to be worthwhile. The agricultural industry requires massive outlays of fossil fuels for fertilizers and to power field equipment, not to mention producing harmful runoff. Yet, despite the environmental negatives, we recognize the overwhelming importance of growing food. Instead of discarding agriculture, we strive to improve the environmentals of agriculture.

Related: Green Bitcoin: The impact and importance of energy use for PoW

Whether enabling the 1.7 billion unbanked to gain financial inclusion or offering an alternative to predatory international remittance services, it seems clear to me that Bitcoin is worth the energy usage. It’s even clearer that enterprise blockchain is an unmitigated public good.

Newer, alternative blockchain technology uses at least 99.95% less energy than older ones. Enterprise blockchain can use even less energy since it can be tailored for specific use cases. In addition to using significantly less energy, Enterprise blockchain is helping organizations achieve sustainability goals.

Blockchain as a key driver for renewable energy

Solar and wind are now cheaper than fossil fuels such as coal and natural gas. Solar and wind are now comparable to geothermal and hydroelectric. Despite solving the cost problem, renewables have several problems preventing mass adoption. Geothermal and hydroelectric are geography bound. Solar, wind and to a lesser extent, hydroelectric suffer intermittency and grid congestion. Intermittency means they are currently too unreliable. There’s no sun at night, the wind sometimes stops, and there are rainy and dry seasons. Grid congestion is similar to car traffic. Due to geographic constraints, renewables are usually built in rural areas. However, most energy is needed in dense towns and cities. Like a car in a traffic jam, the electricity is delayed getting to its destination.

There are solutions, such as building battery storage and increasing transmission capacity, but these are expensive infrastructure projects. This is where Bitcoin, and blockchain, in general, can help. Unlike Bitcoin miners and other blockchain projects can be built anywhere. They’re profitable businesses so they can essentially subsidize the building of renewable infrastructure by always using excess energy produced.

Related: No, Musk, don’t blame Bitcoin for dirty energy — The problem lies deeper

Another promising energy technology well suited to blockchain is person-to-person (P2P) electricity trading. These energy sharing schemes provide electricity suppliers and consumers with the opportunity to trade energy without the need for existing third-party intermediaries while increasing the level of renewable energy. Similar to renewable infrastructure, blockchain-based projects will incentivize the development of P2P energy grids.

Blockchain enables material procurement and provenance

Consumer demand for more ethically sourced products is steadily increasing. Companies have to prove that their product is produced in such a way that protects the environment and public health, and is made ethically. Consumers wary of greenwashing, have had to rely on information provided by companies. Blockchain-based projects are already changing this dynamic.

Everledger has created tools to increase consumer and enterprise insight into the provenance of a given object. By combining blockchain, AI and IoT, Everledger digitally streamlines compliance processes and allows companies to demonstrate the true origin of their products.

Transparency and traceability will be crucial to fostering consumer trust in food supply chains. Supermarket giant Carrefour and the world’s largest brewer AB InBev partnered with enterprise blockchain developer SettleMint to deliver a digital traceability solution that utilizes dynamic QR codes attached to a product during the packaging process.

Green financing

Green financing is the use of loans to support sustainable companies and fund the projects and investments they make. It will be crucial to close the $2.5 trillion annual SDG funding gap, which is estimated to grow bigger. A good example of green financing is the green bond (GB) market. According to the Climate Bonds Initiative, $269.5 billion in GBs were issued in 2020.

Unfortunately, GBs are not without problems, such as confirming that sustainability metrics are authentic, or that funds were used to support sustainability. Blockchain can immutably store this data, thus, projects can be verified to satisfy sustainability requirements. Blockchain can help in other ways too, like tokenization.

Related: How will blockchain technology help fight climate change? Experts answer

Oi Yee Choo, chief commercial officer at iSTOX, a Singapore-based digital securities exchange, said in this interview: “Even in markets where the demand for green bonds is high because investors are motivated by ESG considerations, tokenization helps investors diversify their portfolio across different bonds because of smaller subscription sizes.”

The blockchain industry is currently far from ideal in terms of environmental sustainability. However, if it maintains its current trajectory, the blockchain industry will not only be an exemplar but an enabler of environmental sustainability.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Matthew Van Niekerk is a co-founder and the CEO of SettleMint — a low-code platform for enterprise blockchain development — and Databroker — a decentralized marketplace for data. He holds a BA with honors from the University of Western Ontario in Canada and also has an international MBA from Vlerick Business School in Belgium. Matthew has been working in fintech innovation since 2006.

FATF guidance on virtual assets: NFTs win, DeFi loses, rest remains unchanged

The Financial Action Task Force has laid out its perspective on crypto, including its views of nonfungible tokens and decentralized finance.

The Financial Action Task Force (FATF) released its long-awaited guidance on virtual assets, laying out standards that have the potential to reshape the crypto industry in the United States and around the world. The guidance addresses one of the most important challenges for the crypto industry: To convince regulators, legislators and the public that it does not facilitate money laundering.

The guidance is particularly concerned with the parts of the crypto industry that have recently brought about significant regulatory uncertainty including decentralized finance (DeFi), stablecoins and nonfungible tokens (NFTs). The guidance largely follows the emerging approach of U.S. regulators toward DeFi and stablecoins. In a positive note for the industry, the FATF is seemingly less aggressive toward NFTs and arguably calls for a presumption that NFTs are not virtual assets. The guidance, however, opens the door for members to regulate NFTs if they are used for “investment purposes.” We expect this guidance to add fuel to the NFT rally that has been underway for the majority of 2021.

Related: The FATF draft guidance targets DeFi with compliance

Expanding the definition of virtual asset service providers

The FATF is an intergovernmental organization whose mandate is to develop policies to combat money laundering and terrorist financing. While the FATF cannot create binding laws or policies, its guidance exerts a significant influence on counter-terrorist financing and anti-money laundering (AML) laws among its members. The U.S. Department of the Treasury is one of the government agencies that generally follows and implements regulations based on the FATF’s guidance.

The FATF’s much-anticipated guidance takes an “expansive approach” in broadening the definition of virtual asset service providers (VASPs). This new definition includes exchanges between virtual assets and fiat currencies; exchanges between multiple forms of virtual assets; the transfer of digital assets; the safekeeping and administration of virtual assets; and participating in and providing financial services relating to the offer and sale of a virtual asset.

Once an entity is labeled as a VASP, it must comply with the applicable requirements of the jurisdiction in which it does business, which generally includes implementing Anti-Money Laundering (AML) and counter-terrorism programs, be licensed or registered with its local government and be subject to supervision or monitoring by that government.

Separately, the FATF defines virtual assets (VAs) broadly:

“A digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes.” But excludes “digital representations of fiat currencies, securities and other financial assets that are already covered elsewhere in the FATF Recommendations.”

Taken together, the FATF’s definition of VAs and VASPs seemingly extends AML, counter-terrorism, registration and monitoring requirements to most players in the crypto industry.

Impact on DeFi

The FATF’s guidance regarding DeFi protocols is less than clear. The FATF starts by stating:

“DeFi application (i.e., the software program) is not a VASP under the FATF standards, as the Standards do not apply to underlying software or technology…”

The guidance does not stop there. Instead, the FATF then explains that DeFi protocol creators, owners, operators or others who maintain control or sufficient influence over the DeFi protocol “may fall under the FATF definition of a VASP where they are providing or actively facilitating VASP services.” The guidance goes on to explain that owners/operators of DeFi projects that qualify as VASPs are distinguished “by their relationship to the activities undertaken.” These owners/operators may exert sufficient control or influence over assets or the project’s protocol. This influence can also exist by maintaining “an ongoing business relationship between themselves and users” even when it is “exercised through a smart contract or in some cases voting protocols.”

In line with this language, the FATF recommends that regulators not simply accept claims of “decentralization and instead conduct their own diligence.” The FATF goes so far as to suggest that if a DeFi platform has no entity running it, a jurisdiction could order that a VASP be put in place as the obliged entity. In this respect, the FATF has done little to move the needle on the regulatory status of most players in DeFi.

Related: DeFi: Who, what and how to regulate in a borderless, code-governed world?

Impact on stablecoins

The new guidance reaffirms the organization’s previous position that stablecoins — cryptocurrencies whose value is pegged to a store of value such as the U.S. dollar — are subject to the FATF’s standards as VASPs.

The guidance addresses the risk of “mass adoption” and examines specific design features that affect AML risk. In particular, the guidance points to “central governance bodies of stablecoins” that “will in general, be covered by the FATF standards” as a VASP. Drawing on its approach to DeFi generally, the FATF argues that claims of decentralized governance are not enough to escape regulatory scrutiny. For example, even when the governance body of stablecoins is decentralized, the FATF encourages its members to “identify obliged entities and … mitigate the relevant risks … regardless of institutional design and names.”

The guidance calls on VASPs to identify and understand stablecoins’ AML risk before launch and on an ongoing basis, and to manage and mitigate risk before implementing stablecoin products. Finally, the FATF suggests that stablecoin providers should seek to be licensed in the jurisdiction where they primarily conduct their business.

Relayed: Regulators are coming for stablecoins, but what should they start with?

Impact on NFTs

Along with DeFi and stablecoins, NFTs have exploded in popularity and are now a major pillar of the contemporary crypto ecosystem. In contrast to the expansive approach toward other aspects of the crypto industry, the FATF advises that NFTs are “generally not considered to be [virtual assets] under the FATF definition.” This arguably creates a presumption that NFTs are not VAs and their issuers are not VASPs.

However, similar to its approach toward DeFi, the FATF emphasizes that regulators should “consider the nature of the NFT and its function in practice and not what terminology or marketing terms are used.” In particular, the FATF argues that NFTs that “are used for payment or investment purposes” may be virtual assets.

While the guidance does not define “investment purposes,” the FATF probably intends to encompass those who buy NFTs with the intent to sell them at a later time for a profit. While many buyers purchase NFTs because of their connection with the artist or work, a large swath of the industry purchases them because of their potential to increase in value. Thus, while the FATF’s approach toward NFTs is seemingly not as expansive as its guidance for DeFi or stablecoins, FATF countries may rely on the “investment purposes” language to impose stricter regulation.

Related: Nonfungible tokens from a legal perspective

What the FATF guidance means for the crypto industry

The FATF guidance closely tracks the aggressive stance from U.S. regulators concerning DeFi, stablecoins and other major parts of the crypto ecosystem. As a result, both centralized and decentralized projects will find themselves increasingly pressured to comply with the same AML requirements as traditional financial institutions.

Moving forward, DeFi projects, as we are already seeing, will burrow deeper into DeFi and experiment with new governance structures such as decentralized autonomous organizations (DAOs) that approach “true decentralization.” Even this approach is not without risk because the FATF’s expansive definition of VASPs creates issues with key signers of smart contracts or holders of private keys. This is particularly important for DAOs because signers could be classed as being VASPs.

Given the expansive way that the FATF interprets who “controls or influences” projects, crypto entrepreneurs will have a tough fight ahead of them not only in the United States but also around the world.

This article was co-authored by Jorge Pesok and John Bugnacki.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article is for general information purposes and is not intended to be and should not be taken as legal advice.

Jorge Pesok serves as general counsel and chief compliance officer for Tacen Inc., a leading software development company that builds open-source, blockchain-based software. Before joining Tacen, Jorge developed extensive legal experience advising technology companies, cryptocurrency exchanges and financial institutions before the SEC, CFTC, and DOJ.
John Bugnacki serves as policy lead and law clerk for Tacen Inc. John is an expert on governance, security and development. His research and work have focused on the vital intersection between history, political science, economics and other fields in producing effective analysis, dialogue and engagement.

Reelected Miami mayor to take 401k retirement savings partly in Bitcoin

Miami Mayor Francis Suarez also receives a part of his salary in Bitcoin with the help of a third-party payment processor Strike.

The long-standing mayor of Miami Francis Suarez has now announced plans to take a part of his 401(k) payout in Bitcoin (BTC) just a month after he started receiving salary in BTC. 

Soon after becoming the first United States lawmaker to accept a part of his salary in Bitcoin, Suarez wants to dedicate a part of his retirement savings to Bitcoin based on “a personal choice,” he said in an interview with Real Vision:

“I just think it is a good asset to be invested in. I think it’s one that’s obviously going to appreciate over time. It’s one that I believe in.”

Suarez highlighted that Bitcoin’s success is tightly tied to the confidence in the system, which is inherently an “open-source, un-manipulatable system”. The mayor revealed that he has started receiving salary payments in Bitcoin through the help of a third-party payment processor Strike.

The mayor also shared that the city government accepts fee payment in Bitcoin from Miami residents. While the Mayor explores the various options for enabling the Bitcoin payments for retirement savings, Suarez is certain to establish a relevant system by 2022.

Related: Miami will hand out free Bitcoin to residents from profits on city coin

In an effort to further drive Miami’s Bitcoin adoption drive, Mayor Suarez announced on Nov. 12 to give Bitcoin yield as a dividend directly to every eligible Miami resident.

As Cointelegraph reported, the city of Miami will divide and distribute the BTC yields to residents earned by staking its in-house cryptocurrency, MiamiCoin, which was initially launched by Citycoins to fund municipal projects by generating yield. In a bid to transform the city into a major cryptocurrency hub, Suarez said:

“We’re going to create digital wallets for our residents. And we’re going to give them Bitcoin directly from the yield of MiamiCoin.”

Point of no return? Crypto investment products could be key to mass adoption

Cryptocurrency investment products could be a missing piece of the puzzle towards mass adoption, and are now becoming increasingly more common.

The first Bitcoin (BTC) futures exchange-traded fund (ETF) was launched in the United States back on October 19, 2021. Since then, a number of other cryptocurrency investment products have been launched in various markets.

That first ETF, the ProShares Bitcoin Strategy ETF, quickly became one of the top ETFs of all time by trading volume on its debut, and soon after, several other Bitcoin futures ETFs were launched in the United States, providing investors with different investment options.

To Martha Reyes, head of research at cryptocurrency trading platform Bequant, these options are important. Speaking to Cointelegraph, Reyes pointed out that in traditional finance, ETFs have “proved to be incredibly popular in recent years, with ETF assets expected to reach $14 trillion by 2024.”

Reyes said that investors who have been on the sidelines of the market may now choose to invest in cryptocurrencies if they prefer the “low cost, flexibility and convenience [of ETFs], especially as they then do not have to custody the crypto themselves.”

Custodying crypto assets, Reyes said, can prove a “technical barrier to some non-crypto natives.” The launch of crypto ETFs may offer investors the type of diversification they want in their portfolios through crypto, although some may want to access the market “via baskets reflecting different trends in this rapidly evolving market.” She added:

“Others prefer to be more hands on or have a combination of strategies. The important thing is that investors have options.”

Several options have, in fact, been launched over the last few weeks. United States-based firm WisdomTree has listed its cryptocurrency exchange-traded product (ETP), Crypto Mega cap Equal Weight ETP, on Euronext exchanges in Paris and Amsterdam.

Trading under the ticker symbol MEGA, the product is backed by physical cryptocurrencies including Bitcoin and Ether (ETH) and is rebalanced quarterly. WisdomTree also launched its WisdomTree Crypto Market (BLOC) and WisdomTree Crypto Altcoin (WALT) ETPs in Europe.

Similarly, in December, Bitcoin Capital AG released two ETPs on the SIX Swiss Exchange, offering investors exposure to Bitcoin and Ether. These products are actively managed by FICAS AG and are available to institutional, professional and private investors.

These products have so far been successful and more options are being launched on a regular basis, effectively boosting investors’ options in the market. To some experts, these products are part of the next step cryptocurrencies need to take to be widely adopted.

Investment products and adoption

To Reyes, participation in these investment products is so far “primarily institutional,” especially in countries like the United States in which only futures products are trading. She said that retail investors “are cognizant of the added rollover costs of a future versus a spot ETF, meaning underperformance versus the underlying.”

Reyes added that for “wide retail participation, we would probably need to see a spot product.”

Speaking to Cointelegraph Sui Chung, CEO of FCA-regulated crypto indices provider CF Benchmarks, said that cryptocurrency investment products are “significant drivers of mass adoption,” and while the firm would “like to see a wider choice of avenues” the impact of these products could still be significant:

“We shouldn’t underestimate the impact these products have in bringing new investors and capital to crypto assets and how this can accelerate long-term adoption.”

Karan Sood, CEO and managing director at Cboe Vest, an asset management partner of Cboe Global Markets, told Cointelegraph that increased participation from a diverse set of investors is “good for the market,” as it “increases liquidity and helps build out the market infrastructure.”

Sood said that before investing, investors should review their possibilities carefully as some products were initially launched to provide investors access to the cryptocurrency market, while others “try to provide a solution to Bitcoin’s extreme volatility problem.”

According to Sood, volatility is “endemic to the crypto asset space,” and sell-offs in which Bitcoin and other crypto assets lose over half of their value are fairly common, so much so that drops of over 20% are to be expected. He added:

“However, what is new is the availability of funds that allows investors to access Bitcoin exposure with strategies designed to reduce the impact of severe sustained declines.”

These funds, he said, take the “managed volatility set of investment strategies extensively used in conventional asset classes” and apply them to Bitcoin futures to protect investors against the cryptocurrency’s volatility.

This volatility is believed to be keeping some institutional investors on the sidelines and stopped regulators like the U.S. Securities and Exchange Commission (SEC) from finding ways to properly protect investors and accommodate for the innovation in the space.

To Chung, the cryptocurrency market has matured to the point there are now “core” exchanges like Coinbase and Kraken that ensure fair and manipulation-free trading, so market manipulation should not be a problem. Regulated products are, nevertheless, preferable for institutions and more conservative investors.

Considering the lack of a spot Bitcoin ETF in the U.S. and the disadvantages of futures-based products mentioned by Reyes above, retail investors are left either gaining exposure from other markets or buying crypto directly. These options are, nevertheless, not optimal for some.

Early stages for crypto investment products

Buying cryptocurrencies on the spot market has been the go-to strategy for most crypto investors over the last few years, but more conservative investors who may want to diversify their portfolios may be uncomfortable with the lack of regulation in the market.

As Cboe Vest’s Sood put it, when compared to the “trading and custody infrastructure that exists for conventional assets such as stocks, bonds and funds, there is little in the form of regulation.” This lack of regulation, he said, has been “exemplified by the persistent news about the loss of keys, hacking of systems and fraud in trading in crypto assets.”

Bitcoin futures investment products operate under the Commodity Futures Trading Commissions’ regulations, while mutual funds with exposure to Bitcoin are actively managed by regulated entities with a rich history of providing strong investor protections.

Taking into account these differences, Sood pointed out that “unless there is a change in the regulation of spot Bitcoin, there is a sound basis for BTC futures-based investments but not for spot-based investments.”

Notably, spot Bitcoin ETFs are available in various jurisdictions. In December, Fidelity Canada launched one such product called the Fidelity Advantage Bitcoin ETF. It trades on the Toronto Stock Exchange and is denominated both in Canadian and United States dollars.

Sood said that regulations in the U.S. may be a burden for investment product manufacturers but have “delivered substantial value and protections to U.S. investors over the years.” These protections, he said, have “stood the test of time over decades” and, as such, investors should opt for products regulated in the country if possible. 

While futures-based investment products may not be optimal for retail investors, Sood argued that some sophisticated products have been launched to offer investors the cryptocurrency exposure they may be looking for. He concluded:

“Investing in funds overseas may expose U.S. investors to undue unique risks and tax burdens.“

Bequant’s Reyes pointed out that cryptocurrency ETFs have less than $20 billion in assets under management across 50 products, which means we are “still in the early stages of the adoption” of these products.

Nevertheless, she sees the approval of a futures ETF and rejection of a spot ETF as “inconsistent,” as in other jurisdictions, spot ETFs are already being traded. Making matters worse, a futures product “primarily benefits institutional investors as it is too expensive for individual investors.

Grayscale Investments has notably fired back at the SEC for rejecting VanEck’s spot Bitcoin ETF application, issuing a letter arguing the SEC is wrong to reject such products after approving several Bitcoin futures ETFs.

CF Benchmarks CEO Sui Chung said that while futures products are regulated instruments with oversight from the CFTC, it “isn’t so clear cut for spot Bitcoin,” and the SEC has a challenge in balancing its enforcement mandate with what U.S. investors want.

However, Chung noted that Bitcoin futures ETFs have already “sparked an irreversible change” as they are available “to every single member of the investing public in the world’s deepest capital market.”

Markets, he said, haven’t experienced significant disruptions and “the sky hasn’t fallen in,” meaning that we “have passed the point of no return.” To Chung, firms who can offer investors ETFs that can help diversify and grow their portfolios “will be the winners.”

Making crypto more accessible

A Bitcoin spot ETF could make cryptocurrencies more accessible but to the above experts, the crypto ETF is about more than a product with physical exposure — it’s about making cryptocurrency exposure more accessible.

To Reyes, futures ETFs trading in the U.S. are a “trial run in eventually approving a spot ETF.” Such an ETF, she concluded, would be greatly beneficial:

“A spot Bitcoin ETF would fuel mainstream retail adoption of Bitcoin further. Some investors prefer the ease of accessing the market this way rather than through dedicated crypto exchanges.”

Reyes welcomed regulation, noting that the more regulated fiat-to-crypto on-ramps there are the better, as these platforms can help signal regulatory concerns are easing, further driving up demand for cryptocurrencies.

Chung said that cryptocurrency investment products can lead to mass adoption by ensuring that investors deal with less friction when entering the market, as it may be easier to buy an ETP via an existing brokerage account than to open an account at a cryptocurrency trading platform:

“We don’t want to be dogmatic about how people invest and learn about crypto and its possibilities, our job is simply to open up as many avenues as possible and drive adoption.”

While it isn’t clear when the SEC will approve a Bitcoin spot ETF or whether existing solutions are enough for more conservative investors to make a move, new investment products are making it easier for investors to gain exposure to the space.

Over time, the trend should continue and new products will launch, allowing cryptocurrencies to fully develop in the market as a new asset class that could help hedge against inflation or economic downturns.

Coinbase Launches Defi Yield Earning Service to Over 70 Countries, United States Not Included

The cryptocurrency exchange Coinbase has revealed that it has made decentralized finance (defi) more accessible by giving Coinbase customers from over 70 countries access to earning yield on the stablecoin DAI. Coinbase claims the process is simple with “no fees, lockups, or set-up hassle,” as the firm believes “defi has tremendous potential to help increase economic freedom.”

Coinbase Now Offers Yield on the Defi Stablecoin Issued by Makerdao

Coinbase has announced that it has opened up decentralized finance (defi) services to customers in more than 70 different countries. The news follows the company’s announcement last week when it revealed it acquired BRD wallet and Unbound Security. According to Coinbase, eligible customers in these countries can now earn yield on the defi stablecoin issued by Makerdao called DAI.

“Today we’re introducing a new way for Coinbase’s global customers to put their crypto to work and earn yield,” the firm’s announcement explains. “We are making defi more accessible, enabling eligible customers in more than 70 countries to access the attractive yields of defi from their Dai with no fees, lockups, or set-up hassle.”

Coinbase Defi Users Must Reside in an Eligible Jurisdiction

Coinbase notes that customers that want to participate in earning yield with DAI must access the DAI asset page either on the Coinbase app or Coinbase.com. Users need a balance of DAI to earn and customers must be located in an eligible jurisdiction. Coinbase has been interested in getting into defi-based yield earning and lending programs for a while. It previously had plans to reveal a lending product but was threatened by the U.S. Securities and Exchange Commission.

The Nasdaq-listed cryptocurrency exchange has abandoned the lending program for now. Furthermore, the latest defi yield earning service offered by Coinbase is currently not available for customers in the United States. The service that offers yield on DAI is just the beginning, Coinbase notes, as the company aims to use “a wider variety of assets and a greater number of defi protocols” going forward.

What do you think about Coinbase offering defi services to customers in more than 70 countries? What do you think about the United States being excluded from the Coinbase yield program for now? Let us know what you think about this subject in the comments section below.

Crypto market eyes recovery ahead of key US inflation data release

The Asia Pacific and European markets slide in caution ahead of key U.S. inflation data.

Growing inflation has become a mounting concern for nations around the world, especially the United States. 

The U.S. has seen one of the sharpest rises in consumer inflation over the past year. Lawmakers around the globe have claimed that they didn’t see the inflation coming, but people often draw their attention towards the seeming unrestricted money printing spree throughout the pandemic.

The U.S. has printed 35% of the total U.S. dollar in circulation in 2021 alone which has played a key factor in record-breaking inflation. Market pundits expect a 6% rise in the consumer price index (CPI) in November, which would be the highest in four decades. 

Statistics on the CPI are scheduled to release on Dec. 10.

The Biden administration has said that the $1.85 trillion spending program and tax cuts would slow down the effects of inflation, but experts have been skeptical about the idea of printing more money.

Real M1 money stock 1959-2021. Source: Federal Reserve Bank of St. Louis

Asian Pacific and European markets opened with caution and recorded a broad decline across the board. Japan’s Nikkei 225 declined 1% to 28,437.77. South Korea’s Kospi fell 0.64% to 3,010.23 while the Kosdaq was down 1.1% at 1,011.57. Pan European stock index STOXX 600 was down 0.4% while technology, retail, and healthcare stocks also recorded a loss.

The Asia Pacific markets Dec. 10, 2021. Source: CNBC

The crypto market saw a minor bounce back from last night, contrary to the common decline in traditional markets. Bitcoin (BTC) price recovered above $48,400 after falling to a daily low of $47,358 while Ether (ETH) also recovered above $4,100 after recording a daily low of $4,026. The overall crypto market cap climbed above $2.25 trillion.

With rising inflation and omicron variant inducing panic in the traditional markets, Bitcoin can rise again as the inflation hedge.

Robert Kiyosaki, the author of “Rich Dad Poor Dad” and a businessman himself warned of the incoming market “crash and depression” due to the “fake inflation.” Kiyosaki blamed the Feds and the Biden administration for pushing the fake inflation on people.


Florida governor’s budget proposal wants to let residents pay fees in crypto

The new budget proposal also involves a blockchain pilot for vehicle registrations.

Florida Governor Ron DeSantis has officially proposed the state government to allow businesses to pay state fees with cryptocurrencies like Bitcoin (BTC).

The Republican governor announced the idea as part of his 2022–2023 budget proposal, released on Dec. 9.

According to the official budget highlights, DeSantis proposed to provide $200,000 to the Department of Financial Services to offer Florida corporations the ability to “pay state fees via cryptocurrency directly to the Department of State.”

“Florida encourages cryptocurrency as a means of commerce and furthering Florida’s attractiveness to businesses and economic growth,” the document reads.

DeSantis additionally proposed allocating another $500,000 to explore the potential of blockchain technology to maintain motor vehicle records as well as authenticate Medicaid transactions and detect potential fraud.

The overall $700,000 proposal is dedicated to enable a crypto-friendly Florida, the budget proposal reads.

Florida has been steadily emerging as a major cryptocurrency-friendly jurisdiction in the United States as one of its major cities, Miami, is being actively promoted as the “world’s Bitcoin and crypto capital.”

Related: ​​Navigating CityCoins: Miami citizens to earn Bitcoin despite the city not holding crypto

Last month, Miami Mayor Francis Suarez announced that he aimed to be the first U.S. lawmaker to accept part of his paycheck in Bitcoin. The official reportedly owns both BTC and Ether (ETH).

In September, Miami’s city commissioners voted to accept funds generated by the new MiamiCoin cryptocurrency, which was launched by the smart contracts protocol CityCoins in August. Having generated more than $21 million in yields as of mid-November, MiamiCoin will be available to all Miami residents in the form of a Bitcoin dividend, according to the city mayor.

US lawmaker purchases exposure to Bitcoin through Grayscale shares

Congressperson Marie Newman bought between $15,001 and $50,000 of GBTC in addition to up to $215,000 in Coinbase Global’s COIN shares.

Illinois Representative Marie Newman has disclosed she purchased up to $50,000 in exposure to crypto through shares of Grayscale Bitcoin Trust.

According to a financial disclosure report filed with the U.S. House of Representatives on Wednesday, Congressperson Newman bought between $15,001 and $50,000 of GBTC between Nov. 9 and last Saturday. In addition, she conducted four separate purchases of shares of Coinbase Global’s Class A stock between November and December, up to $215,000.

Section of Illinois Representative Marie Newman’s financial disclosure report for 2021

Members of the U.S. House of Representatives and Senate are permitted to buy, sell and trade stocks and other investments while in office but are also required to report such transactions of more than $1,000 within 30 to 45 days. This reporting is in accordance with the Stop Trading on Congressional Knowledge Act, or STOCK Act, passed in 2012 under President Barack Obama with nearly unanimous approval in both chambers of Congress. 

According to data gathered from financial disclosure reports by Bitcoinpoliticians.org, six other members of Congress currently hold cryptocurrency or some exposure to crypto assets, including Wyoming Senator Cynthia Lummis, Texas Representative Michael McCaul, Pennsylvania Representative Pat Toomey, Alabama Representative Barry Moore, New Jersey Representative Jefferson Van Drew, and Florida Representative Michael Waltz. However, many federal judges and lawmakers have reportedly flouted the STOCK Act by not disclosing certain investments.

Related: Pro-crypto senator Cynthia Lummis discloses up-to-$100K BTC purchase

The disclosure report from Newman comes following members of Congress questioning CEOs of major stablecoin issuers and crypto firms in a hearing to better understand the technology and where a regulatory path may lead. Progressive lawmaker Alexandria Ocasio-Cortez also recently spoke out on social media, saying it was inappropriate for her to hold Bitcoin (BTC) or other digital assets because lawmakers have access to “sensitive information and upcoming policy” and such investments could affect their impartiality.

Coinbase users launch online refund campaign following GYEN troubles

Many Coinbase customers are understandably frustrated after the company decided to freeze their accounts for weeks.

Coinbase has come under fire recently following a technology snafu that reportedly resulted in the company closing many of its customer’s accounts. 

When users attempted to purchase Japanese stablecoin GYEN and Powerledger (POWR), they suffered from technical difficulties. This was then followed by an error in the system response. Now, deeply frustrated customers have launched an online campaign demanding refunds. 

Chris Flemming, a Coinbase user, has started an online petition against the exchange called “Accountability for COINBASE GYEN account freeze,” which has already garnered 1,620 signatures. It states, “We as a whole recognize that mistakes happen and there is the potential for loss when investing in any cryptocurrency or asset. Though in this case the losses came from internal technical errors of Coinbase.”

On Nov. 10, according to a CNBC report, Coinbase listed GYEN for the first time. Somehow, the coin became detached from the Japanese yen’s price it was supposed to track starting around Nov. 17. The token’s value rose to a peak of 0.065643, which is more than 7.5 times greater than investors had anticipated in fiat currency. Transfer activity on Coinbase increased on Nov. 18 and peaked at $122 million, according to the report.

It’s still unclear how many clients were affected, how much money was lost, or whether anybody made a profit by selling before the price tumbled again. The currency is now trading at the yen peg rate as it was originally intended.

Related: Binance CEO reveals one key factor for token listings

A Coinbase representative told CNBC that the company would provide a thorough explanation of what occurred and how concerns would be addressed. The Nasdaq-listed exchange “will publish a blog article on the November 19 event involving GYEN and POWR assets in the coming weeks,” the representative said. They noted that both GYEN and POWR have resumed trading on Coinbase Pro, and withdrawals are enabled on Coinbase.com.

Elon Musk, CEO of Tesla, recently suggested that cryptocurrency owners transfer their funds out of centralized exchanges to safeguard them. “Any crypto wallet that won’t give you your private keys should be avoided at all costs,” Musk said.

US is ‘unquestionably’ behind the curve on crypto ETFs, says Brian Brooks

Brian Brooks proposed regulators treat crypto in much the same way as traditional financial institutions rather than creating an entirely new body to create a single framework for digital assets.

Bitfury CEO and former Acting Comptroller of the Currency Brian Brooks has hinted the regulatory environment in the United States could drive many crypto firms outside the country, and has already stymied companies attempting to offer a variety of financial products.

Speaking at a Wednesday hearing on Digital Assets and the Future of Finance with the House Committee on Financial Services, congressperson Ted Budd said he feared the current policy of regulation by enforcement in the U.S. could “force the next generation of financial tech to be created outside of our country.” Speaking on behalf of Bitfury, Brooks said:

“There are some products that are legal in other countries and are just not legal here,” said Brooks. “One of the things that makes crypto risky is that consumers may not understand the difference between one token and another token, so they may want to diversify […] we don’t allow that in the United States — we do allow it in Canada, we allow it in Germany, Singapore, Portugal and a number of other places.” He added:

“If you’re a developer of [exchange-traded funds], there’s no fuzzy line, it’s super clear: You cannot do that here, so you have to go abroad.”

Bitfury CEO Brian Brooks addressing the House Committee on Financial Services on Wednesday

Brooks placed the lack of exchange-traded funds, or ETFs, in the U.S. on the Securities and Exchange Commission. Though the regulator has recently approved ETFs with exposure to Bitcoin (BTC) futures from investment managers ProShares and Valkyrie, it has yet to give the green light for BTC or other crypto ETFs. In contrast, many U.S. companies with operations in Canada have successfully applied with local regulators for ETFs with direct exposure to crypto. 

Related: More than 40 digital currency ETFs await US regulatory approval

However, the former OCC head suggested the lack of approval of crypto investment products was more of a result of the United States’ “fragmented approach to regulation,” given the number of bodies overseeing banks, finance and now digital assets. Brooks proposed a solution in which traditional financial institutions would be treated in much the same way as crypto.

“When I hear people talk about the idea that we need one regulator for crypto, I would say we should first have one regulator for banks, but we have three of them,” said Brooks. “The last thing we need to do is add another regulator to a system that’s already got dozens of regulators.

“If I’m a crypto lending platform, I should probably be regulated by the FDIC. If I’m a crypto trading platform, I should probably be regulated by the CFTC and SEC, but somehow we treat crypto, because it’s new, as different than everything else. I’m gonna argue that crypto is just a step function improvement in the system.”

CEOs from Circle, FTX, Bitfury, Paxos, Stellar Development Foundation and Coinbase Inc. are currently fielding questions from U.S. lawmakers on the state of digital assets in the country. Cointelegraph reported earlier on Wednesday that House representatives have expressed concerns over token projects exerting centralized control over many users’ assets.