FreeCryptoCurrency.Me

The SWIFT network may be in for some competition after Gibraltar-based Xapo Bank said it will collaborate with stablecoin issuer Circle to offer to members a means bypass the banking payment system with USDC. 

Xapo will offer one-to-one dollar conversion of USDC and convert all deposits of USDC into USD, with a 4.1% annual interest rate on deposits, the bank said. SWIFT is the current system used by institutions worldwide and enables global bank-to-bank payments and transfers. Xapo said that it refrains from lending or fractional reserve banking practices and holds customer funds in reserves and short-term liquid assets. The bank charges $150 to members to recover overhead.

The stablecoin recovered dollar parity after Circle CEO Jeremy Allaire said on Twitter that all of the company’s SVB related deposits were secure.

Circle and Xapo did not immediately respond to requests for comment.

© 2023 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.

Moody’s said that municipalities can save money by using blockchain-based platforms to issue bonds and for government operations, but doing so comes with possible risks that include cybercrime and operating in regulatory uncertainty.

Municipalities might be able to cut up to 35% of administrative costs over the life cycle of a bond by one estimate, the firm said in a report published on Wednesday.

Blockchain adoption for bond issuance at the municipality level might take some time, although some projects are already underway, Moody’s said. However, it added that “several recent municipal debt sales recorded on the blockchain with parallel record-keeping represent an initial small step toward incorporating blockchain in the municipal bond issuance process.”

The report outlines a series of pros and cons for different types of crypto-related activities for municipalities.

On the one hand, “the immutable nature of blockchain also enhances transparency and auditability,” allowing governments to streamline services and even enable mobile voting in some cases. On the other, that comes with potential risks, like cyber crime and “uncertainties surrounding regulatory and legal frameworks and the future of digital assets,” Moody’s said.

Mining revenue

Local governments have benefited from additional revenue from more and more bitcoin mining companies looking to set up shop in North America, particularly in the state of Texas.

One site built by Argo Blockchain in Dickens County “accounted for $17 million, or 6% of the county’s $283 million property tax base as of the end of 2022,” Moody’s said.

On the flip side, relying too much on revenue from mining companies is risky, considering the volatility associated with the industry and the potential environmental impacts.

The bitcoin mining industry was devastated last year as bitcoin prices declined and power costs shot up, thinning margins for companies.

“Since crypto mining company Core Scientific filed for bankruptcy in December 2022, the up to $11 million per year the city of Denton, Texas expected to receive in a deal with the company is now in question,” Moody’s said.

© 2023 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.

Bitcoin mining stocks tracked by The Block were mostly lower on Wednesday, with 18 declining and only one rising.

Bitcoin fell 4.9% to $26,760 by market close.

© 2023 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.

Fed Chair Jerome Powell admits the central bank considered a pause in the past few days, but ultimately it chose to increase the Fed Funds target rate by 25 basis points.

Inflation projections are still too high, and the Fed isn’t ready to waver yet, according to Powell. There’s a long way to go, and the road to its 2% inflation goal will likely be bumpy, he said during a press conference in Washington. As such, the Federal Open Market Committee increased the target rate range to 4.75% to 5% from 4.5 to 4.75%.

Rate cuts are not on the table, Powell said.

Bitcoin was trading at $27,295 by about 3:40 p.m. EDT, down over 3.4%, according to TradingView data. The leading cryptocurrency by market cap, which many have hailed as a safe haven asset in the past few days, plunged throughout Powell’s speech. The DXY, which measures the value of the U.S. dollar relative to a basket of foreign currencies fell. Bitcoin’s price usually increases when the DXY decreases.

BTC and DXY performance post-FOMC, chart by TradingView

The interest rate increase was in line with expectations, and the central bank said it “anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.” 

During his press conference Powell elaborated that line referred to additional interest rate hikes, though he emphasized the “may” in the sentence from the FOMC statement. 

The committee’s economic indicators point to “modest growth in spending and production,” while job gains picked up in recent months and are “running at a robust pace,” the announcement read. Unemployment remains low, and inflation remains elevated. 

“The committee is strongly committed to returning inflation to its 2% objective,” it reiterated. 

source: bls.gov and federalreserve.gov

What’s new?

Beyond the 25-basis point increase, the FOMC also increased its projections for 2024. The policy-setting committee now sees the Fed Funds rate staying around 4.3% next year, up from 4.1% in December.

The committee lowered its annual GDP expectations to 0.4% from 0.5%. It also expects economic growth to be sluggish in 2024, lowering projections to 1.2% from 1.6%.

Powell said that the events of the last few weeks and potential credit tightening, which could have an impact on inflation in its own right, might lead the central bank to assess its increases. When pressed on whether this meant it would pause rates, Chair Powell was quick to say the committee doesn’t know enough at this moment in time. 

It’s too early to say whether these events would impact the possibility of a “soft landing,” he noted. Powell concluded his Q&A session by stating that “rate cuts are not in our base case.”

© 2023 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.