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Last Week [In] Crypto: CFTC Bans Betting Platform From US Election Wagers, Nepal Looks to Launch CBDC

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Last week, the Commodity Futures Trading Commission (CFTC) ordered the PredictIt gambling site to cease operations for failing to follow guidelines. Be[In]Crypto has gathered some of the most important stories in the crypto industry from the past few days, in case you missed them.

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Betting platform hits a brick wall

The leading political gambling platform PredictIt has been ordered by the CFTC to cease operation by February. The move comes after the regulator found that the platform had violated the terms of its agreement. The CFTC stated that the platform had violated the terms of its agreement by offering bets on the US elections. The regulator said that the platform had not complied with the rules set by the commission. The CFTC has not given an apparent reason for the ban on the betting platform.

CFTC

Prediction markets like PredictIt have been trusted by political pundits and major news organizations, but the industry is met with a great deal of cynicism from a cross-section of people.PredictIt has disagreed with the accusation, claiming that it had not violated the terms of its agreement.

Nepal mulls CBDC Launch

Nepal is looking forward to launching a digital currency as the Nepal Rastra Bank (NRB), the country’s central bank, has proposed a revision to legislation governing its powers and responsibilities, allowing it to explore the possibilities of a CBDC. The central bank is adopting a cautious approach as it looks to regulate digital currency. The move comes after the Nepal government announced its plans to launch a digital currency.

Nepal CBDC

 Around the globe, most countries are launching their own digital currency to keep up with the growth of the cryptocurrency market. The central bank is also working on a regulatory framework for the cryptocurrency industry. The move will help to promote the use of digital currency in the country.

The Nepal Rastra Bank has proposed a revision to the Nepal Rastra Bank Act, which will allow the central bank to regulate digital currency. The revision will also allow the central bank to issue a digital currency.

The central bank is also working on a regulatory framework for the cryptocurrency industry. The move will help to promote the use of digital currency in the country. The Nepal Rastra Bank has recommended a revision to the Nepal Rastra Bank Act, which allows the central bank to regulate digital currency.

On the technical side, Revati mentioned that the NRB will use a separate digital wallet for digital banking transactions and will “explore interoperability” with payment service providers.

Most central banks around the globe have quickened their pace in the development of a digital version of their local currencies. At the last count, over 100 countries have made significant steps to create their CBDC, while Nigeria and the Bahamas are among the pioneering countries.

The International Monetary Fund (IMF) claims that its existence is beneficial because of its potential to assist people in gaining access to financial services and lowering transaction costs.

Crypto mining sanctions

Due to the rapid growth of crypto mining, most countries like the U.S. have come up with rules and regulations which govern the use of digital currency. This has led to countries coming up with bodies that monitor the use of digital currency. An example of a sanctioning body is the U.S. Securities and Exchange Commission (SEC). These bodies are responsible for sanctioning individuals who break laws on crypto mining. Last week, the U.S. treasury department sanctioned the token mixing platform Tornado Cash.

This is after the group has been responsible for $7 billion in illicit fund flows since its founding in 2019. Over $455 million stolen by the Lazarus Group, a North Korean hacking collective, was funneled through the mixer.

These sanctions come after funds from the recent Horizon bridge attack in June 2022 and the recent Nomad heist were laundered through Tornado cash.

On Friday, the Netherlands Crime Agency (FIOD) arrested a 29-year-old man in Amsterdam who is believed to be the creator of Tornado Cash, which the U.S. Treasury just banned.

Countries like Iran have started to import goods in cryptocurrency. This has led to rising concerns over sanction evasion. The central banks of both countries have been working on a digital currency for some time now.

Sanctions have led to a reduction in digital currency crimes. Most countries have put in place policies that help to control and monitor the use of digital currency. The U.S. has also established a financial crimes task force, which helps to investigate and prosecute individuals who break laws on the use of digital currency.

Thailand is set to reform crypto rules after the market rout. The Thai Securities and Exchange Commission (SEC) is looking to revise its cryptocurrency rules after the market rout. The SEC is also working on a regulatory framework for the cryptocurrency industry. The move will help to promote the use of digital currency in the country.

Thailand, Banking, Crypto

Due to sanctions, cryptocurrency has now been regulated in most countries across the globe. Central banks have now been able to control digital currency. Financial institutions have also been able to monitor digital currency transactions. This has led to reducing the use of digital currency in criminal activities. Investors have also increased in the crypto market after crypto sanctions have been implemented in the crypto ecosystem.

The cryptocurrency has seen a positive turn after governments started to implement sanctions. This has led to some countries investing in digital currency, where countries use digital tokens as legal tender. An example of a country that has made digital currency a legal tender is a country like El Salvador. The country has also seen an influx of investments in the digital space.

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US Treasury Sanctions Hit Russian Arms Dealer’s Crypto Wallets

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The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed full blocking sanctions on 22 individuals and entities across several countries, including Russia and Cyprus, as part of its sanctions evasion network that supports Russia’s military-industrial complex.

The sanctions were imposed under Executive Order 14024 and are part of the U.S.’s strategy to target sanctions evasion globally, close key channels, and limit Russia’s access to revenue for its war in Ukraine.

US Treasury Goes After Russian Arms Dealer’s Cryptos

The U.S. Treasury’s sanctions were imposed by the Russian Elites, Proxies, and Oligarchs (REPO) Task Force, a multilateral effort to identify, freeze, and seize assets of sanctioned Russians worldwide. This task force leverages information from international REPO partners and key data from Treasury’s Financial Crimes Enforcement Network (FinCEN) to share information, track Russian assets, and sever Russian proxies from the international financial system.

The REPO Task Force aims to maximize the impact of multilateral sanctions while preventing opportunities for Russia to evade or circumvent U.S. and partner sanctions.

The primary target of the sanctions is a Russian sanctions evasion network led by Russia and Cyprus-based arms dealer Igor Zimenkov and his son Jonatan Zimenkov. The Zimenkov network has been involved in projects related to Russia’s defense capabilities, including supplying a Russian company with high-tech devices after Russia’s full-scale invasion of Ukraine. They have also supported sanctioned state-owned Russian defense entities, Rosoboroneksport OAO and State Corporation Rostec, which are critical components of Russia’s military-industrial complex.

Igor and Jonatan Zimenkov have worked closely together to enable Russian defense sales to third-party governments and have engaged directly with Rosoboroneksport’s potential clients to facilitate sales of Russian defense material. Igor Zimenkov has also supported the Belarusian military-industrial complex by enabling the sales efforts of State Owned Foreign Trade Unitary Enterprise Belspetsvneshtechnika in Latin America.

Today, Igor Zimenkov was designated for operating in the defense and related materiel sector of the Russian Federation economy, while Jonatan Zimenkov was designated for having materially assisted, sponsored, or provided financial, material, or technological support for Igor Zimenkov, Rosoboroneksport, and other sanctioned entities.

The Zimenkov network used front companies to funnel money and maintain a lawful appearance. Singapore-based Zimenkov network shell company Asia Trading & Construction PTE Limited and its director, Serena Bee Lin Ng, have sold helicopters to clients in Africa on behalf of the Zimenkov network. Additionally, Cyprus-based Zimenkov network shell company Lobster Management Limited and its director, Mikhail Petrov, have facilitated sanctions evasion by providing support to sanctioned entities.

The Treasury’s OFAC continues to work with its international partners to coordinate information sharing and enforcement and to travel the world in pursuit of sanctions evasion. The sanctions imposed today are a clear signal to Russia and its military-industrial complex that the U.S. and its partners are committed to tightening sanctions enforcement and preventing the evasion of international sanctions.

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BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.



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Digital Wallet Growth Will Enable More Closed-Loop Transactions

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Crypto and fintech investment firm Ark Invest has made bold predictions about digital wallets, estimating that more than half the world will soon be using at least one.

In its Jan. 31 ‘Big Ideas 2023’ research report, Ark Invest revealed that digital wallet global population penetration is currently 40%. This equates to around 3.2 billion users, the firm added.

However, the research suggests that the number of online wallet users will increase at an annual rate of 8%. The firm predicted that this will result in a global population penetration of 65% by 2030:

“Having onboarded billions of consumers and millions of merchants, digital wallets could transform the economics associated with traditional payment transactions, saving them nearly $50 billion in costs.”

It also noted that digital wallets were gaining market share in online and offline transactions. Cash is definitely in decline, accelerated by government initiatives to go digital, as recently seen in Nigeria.


Payment method trends - Ark Invest
Payment method trends – Ark Invest

Digital Wallet Growth to Continue

Ark reported that digital wallets were scaling faster than accounts at traditional financial institutions. Furthermore, U.S. digital wallet adoption rebounded in 2022, surpassing previous highs following a COVID-induced dip.

The firm estimates that U.S. digital wallet users will increase by 7% annually during the next eight years. This will be a growth of around 160 million in 2022 to more than 260 million by the end of the decade.

Digital wallet user growth - Ark Invest
Digital wallet user growth – Ark Invest

Furthermore, online wallets are enabling “closed-loop” ecosystems. This is where consumers and merchants can transact directly, cutting out the middleman. 

“Digital wallets are onboarding millions of merchants to platforms that enable direct consumer-merchant transactions that disintermediate traditional financial institutions,” it noted.

In this closed-loop environment, wallet providers capture more value per transaction, enabling savings to be shared with merchants and consumers.

Open and Closed Lopp transactions - Ark Invest
Open and Closed Lopp transactions – Ark Invest

Additionally, Ark noted that closed-loop transactions could boost the margin structure of wallet providers.

It used Block Inc. (formerly Square) as an example, stating that it paid around 60% of customer transaction fees to third parties in 2022. The fees were paid for interchange, assessment, processing, and bank settlement fees. Block’s net take rate could more than double if customers transacted directly with merchants.

Block Inc. fee structure - Ark Invest
Block Inc. fee structure – Ark Invest

Closed Loop Transactions Could Top 50%

Finally, Ark predicted that these closed-loop transactions could account for over 50% of digital payments by 2030.

It used China as an example where wallets and merchants are largely internal or domestic only.

Closed loop cost savings - Ark Invest
Closed loop cost savings – Ark Invest

In conclusion, digital wallet growth is set to continue. Cutting out the intermediary which they facilitate is beneficial to both the consumer and merchant.

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BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.



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Strike Launches Lightning Remittances in the Philippines

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Bitcoin fintech giant Strike rolled out its Lightning Network money transfer service Send Globally in the Philippines, a $35 billion remittance market.

Send Globally launched in the Southeast Asian country on Jan. 31, 2023, enabling businesses and tourists to receive international money transfers in the Philippine peso. The country receives $35 billion in remittances globally.

How Strike’s Send Globally Service Works

“Remittances are a broken system and Strike delivers an incredibly empowering experience for people to send money around the world in nearly an instant,” Strike CEO Jack Mallers said.

According to a press release, Strike’s remittance service converts a sender’s fiat into Bitcoin and sends the Bitcoin to a Strike partner in the destination country using the Lightning Network, which in the case of the Philippines, is Pouch.ph. Pouch.ph then converts the Bitcoin to the recipient’s fiat currency and credits their bank or mobile money account, with Strike shielding both parties from the tax implications of handling Bitcoin directly.

Bitcoin’s Lightning Network is a layer-two solution on the Bitcoin blockchain that allows micropayments between nodes over a payment channel. Unlike traditional payment networks, Lightning’s low fees enable almost zero-cost remittances.

Recently, Mallers announced a trial to bring Bitcoin Lightning Network payments to retailers through a partnership with Fiserv’s point-of-sale solution Clover Commerce. The trial allows any application with Lightning capability to pay Bitcoin for goods and services at Clover merchants.

Philippine Smartphone and Internet Adoption Auger Well for Strike

Send Globally rolled out to Strike users in Ghana, Nigeria, and Kenya on Dec. 6, 2022, where it has reportedly gained rapid traction.

However, mainstream adoption in the Philippines will depend heavily on network effects, driven by smartphone and internet penetration.

According to Statista, the number of smartphone users will increase from 85 million in 2022 to 87 million by 2023. Additionally, forecasts suggest smartphone users will increase to 91.5 million in 2025, representing roughly 83% of the island nation’s population.

Smartphone Adoption in the Philippines
Smartphone Adoption in the Philippines | Source: Statista

Additionally, Statista predicts that about three-quarters of the population will have internet access by the end of 2023. Growing internet access increases the chance of Strike’s success, since it helped drive adoption of crypto game Axie Infinity.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.

Disclaimer

BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.



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