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The U.S. House Committee on Financial Services hearing will investigate issues around the recent trading surge for shares of GameStop and other companies.

The sudden pullback just short of a new $50,000 high surprised many investors. Here’s what probably happened.

Quick Take

• The NFT market was stagnant in the first half of 2020
• Trends of digital collectibles were often seasonal or hype-driven
• Overall trading volume is increasing despite a lack of growth in unique traders on NFT marketplaces

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Hong Kong’s plan to restrict cryptocurrency investment to professionals means retail investors could move to unlicensed venues, said Global Digital Finance.

SBI’s founder and CEO Yoshitaka Kitao said his firm would turn the planned crypto venture into a core source of profitability.

In this episode, Anna Baydakova and Danny Nelson discuss North Korea reportedly stealing your crypto to create nuclear weapons, Tesla rattling markets at an opportune time and Nigeria trying to ban crypto.

The combined forces of passionate communities with potent tools, and the deepening involvement of institutions, make successful bans less likely.

The blockchain, which had been touted for its ability to handle a high volume of transactions, was brought down by an unusually high number of transactions.

Officials at the European Central Bank have said in recent weeks that they continue to assess all the factors behind a potential launch of a digitized version of the euro.

Among those areas of consideration: the potential effect a digital euro might have on the integrity of the European banking system — and how a digital euro may alter consumer behaviors to the detriment of the health of consumer-facing banks. This consideration has proven to be a consistent theme among public statements from central banks on the topic of central bank digital currencies, or CBDCs. 

On February 10, ECB executive board member Fabio Panetta discussed some of these design considerations during an online seminar. One specific concern he highlighted is whether a digital euro might incentivize consumers to shift deposits away from commercial banks and to the central bank — in particular, perhaps, during times of crisis.

One possible option to forestall this behavior: place a cap on digital euro holdings at the individual level, according to Panetta.

“This would prevent large inflows of bank deposits – as well as volatile portfolio inflows from abroad – into the central bank,” Panetta remarked, who went on to say:

“One way of doing this, while allowing the digital euro to be used for large transactions, would be to require incoming funds in excess of a user’s limit to be redirected to a bank account. The link between private money and digital euro accounts would avoid fragmentation of a user’s liquidity and would also be useful for outgoing payments. Large outgoing transactions could be conducted by transferring a combination of digital euro and private money.”

Panetta also suggested what would effectively be a negative interest rate on accounts to forestall hoarding of digital euros. The goal of such a rate, he argued, would be to encourage using the digital euro as a means of payment.

“Up to that threshold, amounts held in digital euro would never be subject to negative interest rates and would thus never be treated less favourably than cash,” said Panetta. “Above that threshold, remuneration would be set so that larger digital euro holdings are only worthwhile to make larger payments and not on an ongoing basis as a form of investment.”

Panetta’s comments come as ECB officials continue to grapple with the question of whether to issue a digital euro. Panetta largely echoed what other officials have said about this process, noting in his remarks: “Only when all issues have been addressed will we make a decision about whether or not to issue a digital euro.”

 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Fitch Ratings is taking a look at recent payments giants’ steps into cryptocurrency.

A new report from the credit rating agency says the increase of crypto activity from firms may not translate to a short term effect on credit profiles, but it could modernize the financial system over time.

Fitch cited recent moves from PayPal, Square, Visa, Mastercard and Moneygram in its report. These payments firms have recently added crypto products to their offerings. Fitch says this is expanding cryptocurrency use cases for consumers, but it’s too early to surmise if it’ll lead to widespread adoption.

The report recapped payments platforms’ key steps into crypto during 2020. It called PayPal’s addition of crypto buying and selling, “one of the first real world, non-trading related use cases at scale for crypto in the US.” In the short term, it won’t mean much for credit profiles, according to Fitch, but adding crypto capabilities might still be a net gain for payments platforms.

“We expect strategic crypto investments to have a limited near-term effect on credit profiles, given modest capital deployed and the long ramp time,” said Fitch. “However, adding crypto capabilities opens up incremental revenue streams for these companies, even if the return on investment over time and compliance risks are uncertain.”

Though Fitch said crypto is still far from mainstream, it has the potential to improve settlement speeds, lower fees and eliminate intermediaries to enable round-the-clock money movement. In order to realize these benefits, Fitch says, the right regulation is needed.

“Tighter regulation could limit certain benefits described previously, particularly if digital currency issuers are required to obtain banking charters, maintain reserves and/or other strict banking-like requirements,” said the firm.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.