By Reuters | Updated: 26 October 2021
Nigeria on Monday became the first African nation to launch a digital currency – the eNaira – a move its leaders said will expand access to banking, enable more remittances and even grow the economy by billions of dollars.
Africa’s most populous nation joins the Bahamas, the first to launch a general purpose central bank digital currency, known as the Sand Dollar, in October. China has ongoing trials and Switzerland and the Bank of France have announced Europe’s first cross-border experiment.
But experts and cryptocurrency users in the continent’s biggest economy say the fact that there are more questions than answers regarding the eNaira – and a large amount of worry over the consistency of Central Bank (CBN) rules – means the government faces a tough path to make the eNaira a success.
Central Bank Governor Godwin Emefiele said during Monday’s launch that there had been “overwhelming interest and encouraging response”, adding that 33 banks, 2,000 customers and 120 merchants had already registered successfully with the platform, which is available via an app on Apple and Android.
Some 200 million nairas’ worth of eNaira, which will maintain parity with the traditional currency, has been issued to financial institutions, he said. President Muhammadu Buhari said use of the currency could grow the economy by $29 billion (roughly Rs. 2,17,850 crores) over ten years, enable direct government welfare payments and even increase the tax base.
Nigeria’s young, tech-savvy population has eagerly adopted digital currencies. Cryptocurrency use has grown quickly despite a Central Bank ban in February on banks and financial institutions dealing in or facilitating transactions in them.
Nigeria ranked seventh in the 2021 Global Crypto Adoption Index compiled by research firm Chainalysis. Official digital currencies, unlike crytocurrencies such as bitcoin, are backed and controlled by the central bank.
But some of what drove Nigeria’s enthusiastic adoption of cryptocurrencies was the Central Bank’s own shifting rules regarding accessing foreign currency – and the naira’s plunging value on parallel markets that saw savings shrink.
“It’s not clear looking at the CBN’s body of work that Nigerians would be comfortable using this,” said Ikemesit Effiong, head of research with Lagos-based consultancy SBM Intelligence.
He added that the CBN had not yet made clear whether users could transfer eNaira back into traditional naira, whether they could use cryptocurrency to buy or sell the eNaira or even whether there would be physical locations to use and transfer eNaira, or whether it would be entirely digital.
“There are more questions than answers, even though we are looking at the launch of this digital currency. The fact that this is the case so late in the game is concerning,” he told Reuters.
The CBN issued a nine-page FAQ, which said eNaira users would access it via the phone app, internet banking or a code dialled from mobile phones, but it did not address transferability or other questions raised by Effiong.
Only three local television channels were allowed to attend the launch, and officials took no questions.
For 28-year-old Ebuka Joseph, an art dealer and enthusiastic cryptocurrency user in the commercial capital, Lagos, the uncertainty means he will stay on the sidelines, for now.
His concerns centre on whether he would easily be able to change eNaira back into normal currency.
“I have had issues trusting the central bank … because they have already banned crypto,” he told Reuters. “I want to hear from people, see people use it, before I venture into it.”
© Thomson Reuters 2021
Cryptocurrency in India: Proposed Bill Banning Crypto Payments Could Mean Jail for Violations, Document Shows
By Reuters | Updated: 7 December 2021
Proposed legislation that would ban the use of cryptocurrencies as a method of payment in India also seeks to make those who infringe the law subject to arrest without a warrant and being held without bail, according to a source and a summary of the bill seen by Reuters.
Prime Minister Narendra Modi’s government has previously flagged that it plans to ban most cryptocurrencies – a move which follows measures by China this September that intensified its crackdown on cryptocurrencies.
According the summary of the bill, the Indian government is planning a “general prohibition on all activities by any individual on mining, generating, holding, selling, (or) dealing” in digital currencies as a “medium of exchange, store of value and a unit of account”.
Flouting any of these rules would also be “cognisable” which means an arrest without a warrant is possible, and “non bailable,” it said.
The source, who has direct knowledge of the matter, was not authorised to speak to media and declined to be identified. The finance ministry did not respond to an email seeking comment.
Although the government has previously said it aims to to promote blockchain technology, the proposed law will also deal a blow to its use as well as to the non-fungible token market in India, lawyers said.
“If no payments are allowed at all and an exception is not made for transaction fee then it will also effectively stop blockchain development and NFT,” said Anirudh Rastogi, founder of law firm Ikigai Law.
The government’s plans to crack down heavily on cryptocurrency trading sparked a frenzy in the market and several investors exited with significant losses.
Lured by a barrage of advertisements and rising prices for cryptocurrencies, the number of investors in crypto assets has surged in India.
While no official data is available, industry estimates suggest there are some 15 million to 20 million crypto investors in the country, with total crypto holdings of roughly Rs. 45,000 crore.
The government now plans to also come down heavily on advertisements that seek to woo new investors, according to the draft summary of the bill and the source.
Self-custodial wallets that allow people to store digital currencies outside exchanges are also likely to be banned, the source added.
The tough new regulations stem from the central bank’s grave concerns about digital currencies and aim to put in safeguards to ring-fence the traditional financial sector from cryptocurrencies, the draft summary of the bill said.
The Securities and Exchange Board of India (SEBI) will be the regulator for crypto assets, the draft summary also said.
© Thomson Reuters 2021
Bitcoin Price Down by a Fifth as Crypto Market Crash Sees $1 Billion Worth Liquidated
By Reuters | Updated: 4 December 2021
Bitcoin shed a fifth of its value on Saturday as a combination of profit-taking and macro-economic concerns triggered nearly a billion dollars worth of selling across cryptocurrencies.
Bitcoin was 12 percent down at 9:20 GMT at $47,495 (roughly Rs. 35.76 lakhs). It fell as low as $41,967.5 (roughly Rs. 31.60 lakhs) during the session, taking total losses for the day to 22 percent.
The broad selloff in cryptocurrencies also saw ether, the coin linked to the Ethereum blockchain network, plunge more than 10 percent.
Based on cryptocurrency data platform Coingecko, the market capitalisation of the 11,392 coins it tracks dropped nearly 15 percent to $2.34 trillion. That value had briefly crossed $3 trillion last month, when bitcoin hit a record $69,000 (roughly Rs. 51.96 lakhs).
The plunge follows a volatile week for financial markets. Global equities and benchmark US bond yields tumbled on Friday after data showed US job growth slowed in November and the Omicron variant of the coronavirus kept investors on edge.
Justin d’Anethan, Hong Kong-based head of exchange sales at cryptocurrency exchange EQONEX, said he had been watching the increase in leverage ratios across the cryptocurrency markets as well how large holders had been moving their coins from wallets to exchanges. The latter is usually a sign of intent to sell.
“Whales in the crypto space seem to have transferred coins to trading venue, taken advantage of a bullish bias and leverage from retail traders, to then push prices down,” he said.
The selloff also comes ahead of testimony by executives from eight major cryptocurrency firms, including Coinbase Global CFO Alesia Haas and FTX Trading CEO Sam Bankman-Fried, before the US House Financial Services Committee on December 8.
The hearing marks the first time major players in the crypto markets will testify before US lawmakers, as policymakers grapple with the implications of cryptocurrencies and how to best regulate them.
Last week, the US Securities and Exchange Commission (SEC) rejected a second spot-bitcoin exchange-traded fund proposal from WisdomTree.
Data from another platform Coinglass showed nearly $1 billion worth of cryptocurrencies had been liquidated over the past 24 hours, with the bulk being on digital exchange Bitfinex.
“If anything, this is the opportunity to buy the dip for many investors who might have previously felt like they missed the boat. We can see tether bought at a premium, suggesting people are getting cash ready, within the crypto space, to do just that,” D’Anethan said, referring to the biggest stablecoin in the cryptocurrency world.
A plunge in bitcoin funding rates — the cost of holding bitcoin via perpetual futures which peaked at 0.06 percent in October — also showed traders had turned bearish.
The funding rate on cryptocurrency trading platform BitMEX fell to a negative 0.18% from levels of 0.01 percent for most of November.
Bitcoin Trading in India: No Proposal to Recognise Crypto, Says Finance Minister Nirmala Sitharaman
By Press Trust of India | Updated: 30 November 2021
The government has no proposal to recognise Bitcoin as a currency in the country, Finance Minister Nirmala Sitharaman told the Lok Sabha on Monday.
She also informed the House that the government does not collect data on Bitcoin transactions. Bitcoin price in India stood at Rs. 43.79 lakh as of 1:30pm IST on November 30.
Replying to a question on whether the government has any proposal to recognise Bitcoin as a currency in the country, the finance minister said, “No, sir”.
Bitcoin is a digital currency that allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties.
It was introduced in 2008 by an unidentified group of programmers as a cryptocurrency as well as an electronic payment system.
It is reportedly the first decentralised digital currency where peer-to-peer transactions take place without any intermediary.
The government plans to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill 2021 in the winter session of Parliament which began on Monday.
The Bill seeks to ban all private cryptocurrencies but allows for some exceptions to promote the underlying technologies, while allowing an official digital currency by RBI.
In a separate reply to a written question, Minister of State for Finance Pankaj Chaudhary said the government has received a proposal from the RBI in October 2021 for amendment to the Reserve Bank of India Act, 1934 to enhance the scope of the definition of ”bank note” to include currency in digital form.
RBI has been examining use cases and working out a phased implementation strategy for introduction of Central Bank Digital Currency (CBDC) with little or no disruption, he said in reply to the question asked by Adoor Prakash.
Central Bank Digital Currency (CBDC) is introduced by a central bank.
Chaudhary said introduction of CBDC has the potential to provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs and reduced settlement risk.
“Introduction of CBDC would also possibly lead to a more robust, efficient, trusted, regulated and legal tender-based payments option. There are also associated risks which need to be carefully evaluated against the potential benefits,” he said.
Replying to another question, Sitharaman said ministries and departments have spent Rs 2.29 lakh crore as capital expenditure during the April-September period of the current fiscal.
This is 41 percent of the Budget Estimate (BE) of Rs 5.54 lakh crore for 2021-22. The actual expenditure during current fiscal is about 38 per cent higher than the corresponding expenditure in FY 2020-21, she said.
To accelerate capital expenditure for creation and upgradation of infrastructure in the economy, the government had launched the National Infrastructure Pipeline (NIP) with projected infrastructure investment of Rs 111 lakh crore during the period 2020-2025 to provide world-class infrastructure across the country and improve the quality of life for all citizens.
National Monetization Pipeline (NMP) was also launched on August 23, 2021 to unlock the value of investments in public sector assets by tapping private sector capital and efficiencies for delivering infrastructure services, she said.
The monetisation proceeds are envisaged to be ploughed back to augment existing/ create greenfield infrastructure to boost the economy, she added.
Subsequently, she said, Gati Shakti (National Master Plan for Infrastructure Development) was launched on October 13, 2021 as a digital platform to bring ministries/departments together for integrated planning and coordinated implementation of infrastructure connectivity projects.
It will also facilitate the last-mile connectivity of infrastructure and reduce travel time for people, she noted.
On inflation, the finance minister said price situation of major essential commodities is being monitored by the government on a regular basis and corrective actions are taken from time to time.
“The uptrend in inflation has been largely led by exogenous factors viz. increased international prices of crude oil and edible oils which have an impact on domestic inflation due to India’s import dependence on these items,” she said.
The rise of wholesale price index (WPI) inflation is also mostly driven by ”fuel and power” and manufactured products inflation, once again driven by increased global prices of crude oil and increase in international commodity/input prices, she said.
Several supply side measures have been taken by the government to curb the inflationary pressures, the minister said.
To check fuel prices, Sitharaman said, the central government has reduced Central Excise Duty on petrol and diesel by Rs. 5 and Rs. 10 respectively with effect from November 4, 2021.
“In response many states governments have also reduced Value Added Tax on petrol and diesel. Consequently, retail prices of petrol and diesel have sobered down,” she said.
As an additional measure to control prices, India has agreed to release 5 million barrels of crude oil from its Strategic Petroleum Reserves, she said.
This release will happen in parallel and in consultation with other major global energy consumers including the US, China, Japan, and Korea.
Coinstore Cryptocurrency Exchange Enters India Despite Fear of Ban on Virtual Currencies
By Reuters | Updated: 29 November 2021
Singapore-based virtual currency exchange Coinstore has begun operations in India at a time when the Indian government is preparing legislation to effectively bar most private cryptocurrencies.
Coinstore has launched its Web and app platform and plans branches in Bangalore, New Delhi, and Mumbai which will act as its base in India for future expansion, its management said.
“With nearly a quarter of our total active users coming from India, it made sense for us to expand into the market,” Charles Tan, head of marketing at Coinstore told Reuters.
Asked why Coinstore was launching India despite the pending clampdown on cryptocurrencies, Tan said: “There have been policy flip-flops but we hope things are going to be positive and we are optimistic that the Indian government will come out with a healthy framework for cryptocurrencies.”
The New Delhi government is planning to discourage trading in cryptocurrencies by imposing hefty capital gains and other taxes, two sources told Reuters earlier this month.
It has said that it will allow only certain cryptocurrencies to promote the underlying technology and its uses, according to a legislative agenda for the winter session that is set to start later this month.
Tan said Coinstore plans to recruit about 100 employees in India and spend $20 million (roughly Rs. 150 crore) for marketing, hiring and development of crypto-related products and services for the Indian market.
Coinstore is the second global exchange to enter India in recent months, following in the footsteps of CrossTower which launched its local unit in September.
The price of the world’s biggest cryptocurrency, Bitcoin, has more than doubled since the start of this year, attracting hordes of Indian investors. Bitcoin price in India stood at Rs. 43.13 lakh as of 10am IST on November 29.
Industry estimates suggest there are 15 million to 20 million crypto investors in India, with total crypto holdings of around Rs. 40,000 crore.
Coinstore also plans to expand into Japan, Korea, Indonesian, and Vietnam, according to Tan.
Bitcoin Tumbles Over 9 Percent, Smaller Tokens Take a Hit as Coronavirus Variant Shakes Markets
By Reuters | Updated: 27 November 2021
Bitcoin tumbled over nine percent on Friday, dragging smaller tokens down, after the discovery of a new, potentially vaccine-resistant coronavirus variant saw investors dump riskier assets for the perceived safety of bonds, the yen and the dollar.
Bitcoin, the largest digital currency, fell as much as 9.2 percent to $53,551 (roughly Rs. 40,19,200), its lowest since October 10. The second largest cryptocurrency Ether fell over 13 percent to its lowest in a month as investors ditched cryptocurrencies.
Bitcoin, whose 13-year life has been peppered by bouts of extreme volatility, was on track for its biggest one-day drop since September 20. It has slumped by more than a fifth since hitting a record high of almost $70,000 (roughly Rs. 52,53,700) earlier this month.
Scientists said the coronavirus variant, detected in South Africa, Botswana and Hong Kong, has an unusual combination of mutations and may be able to evade immune responses or make it more transmissible.
“The spread of (the variant), especially to other countries, could wither investor appetite further,” said Yuya Hasegawa at Tokyo-based exchange Bitbank. “BTC’s upside will likely be limited and the market should brace for further loss.”
Bitcoin hit an all-time high of $69,000 (roughly Rs. 51,78,700) earlier this month as more large investors embraced cryptocurrencies, with many drawn to its purported inflation-resistant qualities.
Others have piled into the digital token on the promise of quick gains, a draw that has been heightened by record low or negative interest rates. Yet Bitcoin’s volatility has lingered, drawing questions over its suitability as a stable store of value.
Ether was last at $3,924 (roughly Rs. 2,94,500). It is down almost 20 percent from its record high hit on November 10.
© Thomson Reuters 2021
Crypto Bill: India Seeks to Block Most Cryptocurrencies, Create Framework for Official Digital Currency
By Reuters | Updated: 24 November 2021
India is looking to bar most private cryptocurrencies when it introduces a new bill to regulate virtual currencies in the winter session of Parliament, the government said late on Tuesday.
The government will allow only certain cryptocurrencies to promote the underlying technology and its uses, according to a legislative agenda for the winter session that is set to start later this month.
Through the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, India is also looking to make a framework for the official digital currency that will be issued by the Reserve Bank of India.
The central bank has voiced “serious concerns” about private cryptocurrencies and is set to launch its own digital currency by December.
Bitcoin, the world’s biggest cryptocurrency, is hovering around $60,000 (roughly Rs. 44.7 lakh), and its price has more than doubled since the start of this year, attracting hordes of local investors. Bitcoin price in India stood at Rs. 35.04 lakh as of 9am IST on November 24.
No official data is available but industry estimates suggest there are 15 million to 20 million crypto investors in India, with total crypto holdings of around Rs. 40,000 crore .
Earlier this year, India’s government considered criminalising the possession, issuance, mining, trading, and transference of crypto assets, but a bill was not introduced.
Since then, the government has changed its stance slightly and is now looking to discourage trading in cryptocurrencies by imposing hefty capital gains and other taxes, two sources told Reuters this month.
But a senior government official told Reuters that the plan is to ban private crypto assets ultimately while paving the way for a new Central Bank Digital Currency (CBDC)
Prime Minister Narendra Modi chaired a meeting to discuss the future of cryptocurrencies amid concerns that unregulated crypto markets could become avenues for money laundering and terror financing, sources told Reuters separately.
© Thomson Reuters 2021
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