What has been happening around Blockchain Technology and Cryptocurrencies this week? The most relevant local and international developments as well as appealing background reports in a pointed and compact way in retrospect in our weekly review.
Our payment systems are becoming increasingly digitized. Many of these settlements are being handled by private fintech companies, but also increasingly on public blockchains. Central banks around the globe are now working on pilot projects to introduce central bank digital currencies (CBDCs). CBDCs empower monetary authorities with new capabilities in fiscal policy as well as in the monitoring of money flows. In particular, China's central bank, People' s Bank of China (PBoC), is currently pushing forward the digital yuan. Currently, the digital currency is to enter the second test phase following initial successful trials in various major cities. The next goal is full functionality for international customers at the Winter Olympics in Beijing at the end of 2022, putting the Chinese central bank well ahead in the international race for CBDCs. The U.S. Federal Reserve Bank is yet in an early planning phase, and the European Central Bank (ECB) is in a similar position.
More and more major banks are entering the world of digital assets. This includes the British Standard Chartered Bank (StanChart). Due to strong institutional demand, the financial services provider is launching a trading platform for cryptocurrencies in Europe and the UK. The project originated through a partnership with Hong Kong's first licensed crypto exchange operator (OSL) and is expected to be ready in the fourth quarter of 2021. StanChart's approach is in direct contrast to its domestic rival HSBC. The UK's largest bank has repeatedly spoken negatively about Bitcoin and says it has no plans to include crypto assets in its services.
In Europe and Asia, a number of listed investment products offer access to digital assets. So far, the responsible regulator in the United States has shown some restraint. The Securities and Exchange Commission (SEC) has so far rejected all applications for a Bitcoin ETF. Recently, further established financial service providers such as Goldman Sachs and Fidelity Investments submitted applications. By now, the SEC has a selection of about a dozen requests. Whether approval of the first U.S. bitcoin ETF will come under its new chairman, Gary Gensler, remains to be seen.
With the rapid surge of crypto markets, fraudulent activity has also increased. Some scams are easy to spot, while others are well designed. As a user of digital assets, there are a few things to keep in mind, because refunds for a misstep do not exist in the world of immutable blockchain transactions. Some of the most popular scams include "gifts" from celebrities, Ponzi schemes, and fake websites. An overview of the various threats and appropriate precautions.
In addition: The month of May was exceptional for the crypto markets. Compared to past years, there has never been a monthly price drop on the scale seen. The strong selling pressure started with Tesla's announcement that it would no longer accept Bitcoin as a payment method due to climate concerns. A few days later, news of another crypto ban in China emerged. The increasingly negative sentiment met a fragile market structure and ultimately led to the largest liquidation cascade to date. Despite the strong wave of selling, cryptocurrency fundamentals have not changed. Swiss digital asset specialist 21Shares provides an overview of what happened in May and takes a look into the future.
Selected articles in the weekly review:
China's digital central bank currency is moving into an extended phase of testing.
The major British bank Standard Chartered wants to offer crypto services shortly.
Applications for a Bitcoin ETF in the U.S. are piling up.
There are dangers lurking in the crypto world in the form of various scams.
In May, the crypto markets were exceptionally turbulent. A review and outlook.
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