It was a mixed week for cryptocurrencies, with China’s ban on them still exerting a cloud of uncertainty on the market.
Here are the top stories that caught our eye.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Confusion persists after China cracks down on crypto
Last Friday, China ruled that all cryptocurrency transactions are illegal, which triggered much volatility in crypto markets.
A statement by the People’s Bank of China said that all cryptocurrencies, including both tether and bitcoin, do not represent fiat currency and cannot be traded on the market. China’s government will “resolutely clamp down on virtual currency speculation, and related financial activities and misbehaviour in order to safeguard people’s properties and maintain economic, financial and social order,” it said.
Friday’s announcement is only the latest attempt to curb crypto activity. In recent months, China has banned cryptocurrency mining – China’s mining activities accounted for 65% of total global mining.
A week later, firms are still scrambling to understand what this means for them. “For many companies that made big bets on crypto over the past several years – particularly companies in the tech industry – options may be limited for cashing in their holdings,” says Al Jazeera.
Another source of uncertainty is “when the timeline for the literal cut-off date is”, New York University Professor Winston Ma told Al Jazeera.
And Singapore is vying for any lost crypto business from China, reports the Financial Times: “The country of 5.5 million people has long relied on financial services to help power its $344bn economy, and it is now locked in an intensifying race with Hong Kong and Tokyo for the crown of global financial hub in Asia.”
Since January 2020, crypto companies have been able to obtain an operating licence under Singapore’s Payment Services Act.
Jerome Powell says he has “no intention” of completely banning crypto
The comments were made at the House Financial Services Committee meeting on Thursday. While the meeting’s principal purpose was to ask Powell and Janet Yellen, the Treasury secretary, about the Fed’s response to the pandemic, crypto was a dominant theme at the meeting.
Powell’s comments come just two days after he asked for Congress to help to build the digital dollar.
Powell likened stablecoins to market funds and bank deposits. “They’re to some extent outside the regulatory perimeter, and it’s appropriate that they be regulated. Same activity, same regulation,” he said.
Morgan Stanley boosts bitcoin exposure
US banking giant Morgan Stanley has actively been involved in cryptocurrencies this year, and it recently significantly boosted its exposure to bitcoin.
A regulatory filing on Monday showed that it had increased its exposure via the Grayscale Bitcoin Trust (GBTC).
According to the filing, the Morgan Stanley Europe Opportunity Fund owned 58,116 GBTC Shares worth $2.018m as of 31 July. This is more than double the 28,298 shares it owned at the end of April this year.
Institutional interest in cryptocurrencies has risen this year, and greater participation by Wall Street is considered to be a key factor in propelling cryptocurrencies higher since the start of the year, helping bitcoin break an all-time high of $63,000 earlier this year.
Morgan Stanley is not the only big player involved. Other prominent banks who have also capitalised on the crypto frenzy include JPMorgan and Goldman Sachs.
El Salvador takes the first steps to build a “bitcoin volcano”
El Salvador’s president, Nayik Bukele, said his country took its first steps this week to starting its “bitcoin volcano” project.
The announcement, which was made through a Twitter post on Tuesday, shows bitcoin mining rigs being installed.
Volcano and energy, sounds bizarre doesn’t it? Bukele first announced in June that he would ask LaGeo SA de V, El Salvador’s state-owned geothermal electric company, to come up with a plan to mine bitcoin using cheap renewable energy.
El Salvador became the first country to adopt bitcoin as legal tender last month. The move sparked mass protests, , reports the BBC. Demonstrators, fearing it would lead to “instability and inflation”, took to the streets, and set fire to a bitcoin ATM.
What initially began as a cryptocurrency experiment between two Americans at the beach town of El Zonte is now being closely watched by the world to see what happens when bitcoin becomes legal tender in a nation for the first time.
Bitcoin mining is the process by which bitcoins are created and added to the blockchain network. Cryptocurrency sceptics (often called “no-coiners”) note the high energy usage involved in mining. A study by the University of Cambridge, published earlier this year, shows the bitcoin network’s annual electricity usage exceeds that of Sweden’s, at around 121 terawatt hours
Cryptocurrency markets update
Here’s what happened in the cryptocurrency market in the last seven days:
- Bitcoin rose 6.8% to $47,291.
- Ether rose 3.9% to $3,233.
- Dogecoin fell 3.1% to $0.22.
- Cardano fell 2.9% to $2.23.
- Solana rose 3.3% to $153.80.
What you need to watch out for
Ethereum network’s long-planned upgrade
Ether’s upgrade to a proof-of-stake upgrade is happening in October. The first part of the upgrade, called Altair, is scheduled to take place on 27 October, reports Cointelegraph.
Saloni is a web writer for MoneyWeek focusing on personal finance and global financial markets. Her work has appeared in FTAdviser (part of the Financial Times), Business Insider and City A.M, among other publications. She holds a masters in international journalism from City, University of London.
Follow her on Twitter at @sardana_saloni
From oil to copper: how to trade wisely when capitalising on mega trends
By MoneyWeek Published
Thousands of pensioners forced to claim back huge amounts in emergency tax
Some retirees are losing more than £50,000 in emergency tax when they withdraw money from their pensions, which then has to be clawed back from HMRC.
By Ruth Emery Published
Halifax: House price slump continues as prices slide for the sixth consecutive month
UK house prices fell again in September as buyers returned, but the slowdown was not as fast as anticipated, latest Halifax data shows. Where are house prices falling the most?
By Kalpana Fitzpatrick Published
Rents hit a record high - but is the opportunity for buy-to-let investors still strong?
UK rent prices have hit a record high with the average hitting over £1,200 a month says Rightmove. Are there still opportunities in buy-to-let?
By Marc Shoffman Published
Pension savers turn to gold investments
Investors are racing to buy gold to protect their pensions from a stock market correction and high inflation, experts say
By Ruth Emery Published
Where to find the best returns from student accommodation
Student accommodation can be a lucrative investment if you know where to look.
By Marc Shoffman Published
Best investing apps
We round up the best investing apps. Looking for an easy-to-use app to help you start investing, keep track of your portfolio or make trades on the go?
By Ruth Emery Last updated
The top funds to invest in
Tips Tech-focused funds are continuing to attract private investors and Scottish Mortgage falls back into favour - we look at the top fund, trusts and stocks investors are pumping their money into in the last month
By Vaishali Varu Last updated
The world’s best bargain stocks
Searching for bargain stocks with Alec Cutler of the Orbis Global Balanced Fund, who tells Andrew Van Sickle which sectors are being overlooked.
By Andrew Van Sickle Published
Revealed: the cheapest cities to own a home in Britain
New research reveals the cheapest cities to own a home, taking account of mortgage payments, utility bills and council tax
By Ruth Emery Published