It’s been a hectic start of the year for crypto. Now that we’ve made it to the second month of 2022, let’s dive into crypto news updates.
First, a market update. Bitcoin has been on a downward trend over the last month, dropping from around $47,000 on January 1 to $38,000 as I write. Ethereum has been on a similar decline, from around $3,700 to $2,700 today. But zooming out, both have been on a steep climb over the last two years. So hopefully, most of you are up a lot over the long term and down just a little over the short term.
Now let’s explore what’s going on with crypto in the U.S. and around the world.
Lawmakers in Wyoming and Arizona have proposed allowing those states to accept digital currencies as tax payments. Under the Arizona proposal, the state would recognize bitcoin as legal tender. The Wyoming proposal is not limited to any specific cryptocurrency but would apply only to sales and use taxes.
The proposals reveal much about who is trying to influence the future of crypto — major retailers and banking institutions. The Wyoming proposal is backed by the Merchant Advisory Group, a trade group for retailers that includes Amazon, Walmart and Home Depot.
Wyoming Rep. Ocean Andrew, who sponsored the amendment that would change Wyoming law, said the convenience of the proposal would be a game-changer for retailers. Andrew — who runs a restaurant business based in Laramie — said he wanted to reduce the paperwork burden of sales taxes and make the process more seamless. American CryptoFed is another backer of the Wyoming proposal. And it plans to issue a stablecoin that’s pegged to the consumer price index and can be collected for sales tax purposes.
Sen. Wendy Rogers sponsored the Arizona amendment and appears to be the only one backing it. (Though plenty of crypto enthusiasts are excited about it.) The Arizona amendment seems less likely to become law as the U.S. Constitution prevents individual states from creating their own legal tender. Rogers’ reputation could also present an obstacle, as her far-right views have landed her on the Anti-Defamation League’s extremist rhetoric list.
The proposals have a long way to go in the approval process. But we’ll keep an eye on them.
India’s central bank announced that it expects to launch a digital version of the rupee sometime in the new fiscal year (which begins in April). Indian Finance Minister Nirmala Sitharaman said the digital rupee would “give a big boost to the digital economy.”
Unlike several other countries (China, anyone?), India is not issuing a crypto ban. Indian officials are willing to let trading continue — but will impose a 30% tax on crypto profits.
Crypto proponents are celebrating the taxation proposal as a sign that the Indian government is beginning to accept crypto. Nischal Shetty, co-founder and CEO of Indian crypto exchange WazirX, said, “India is finally on the path to legitimizing the crypto sector in India.”
India isn’t the only country exploring digital currencies. The Central Bank of Jordan (CBJ) is also looking into creating a digital currency. The currency would be backed by the Jordanian dinar. CBJ Governor Adel Al Sharkas said Jordan may even permit crypto trading once lawmakers have the appropriate legislation in place.
The move seems to reflect that Jordan is warming to the idea of crypto. In 2014, the CBJ issued a notice that no banks, financial institutions, exchange companies or payment card companies should handle cryptocurrencies under any circumstances. But plenty of Jordanians have been exploring crypto anyway. As Talal Tabaa, founder of an open-source web development company, said, “It’s illogical that Jordan’s lottery system (gambling) is regulated and accepted, whereas cryptocurrency investment isn’t.”
El Salvador is standing its ground this week. The country soundly rejected a recommendation from the International Monetary Fund (IMF) to stop using bitcoin as legal tender.
The IMF recommended that El Salvador dissolve the $150 million trust fund it created when it made the cryptocurrency legal tender and return any unused funds to its treasury. The IMF cited a familiar refrain: worry about bitcoin’s volatility and the potential for criminals to use it.
Anti-crypto officials around the world have trotted out this argument time and again — never mind the fact that fiat currency is used for illegal purposes on a regular basis.
Fortunately for crypto advocates, El Salvador’s Treasury Minister Alejandro Zelaya is not backing down. “No international organization is going to make us do anything — anything at all,” he said.
Union Bank of the Philippines — one of the largest universal banks in the Philippines, with more than $15 billion in assets under management — plans to offer crypto trading and custodial services.
Cathy Casas is the head of the bank’s blockchain and application programming interface group. And she explained that the average Filipino investor is no stranger to crypto. They hold about 1% to 2% of their personal assets in crypto like bitcoin. And she estimates that about 5% of the local population has dabbled in crypto, many of them young people.
Most significantly, Casas said offering crypto services is “a way to future-proof our banking business.”
If that isn’t a forward-looking approach, I don’t know what is.