No Britcoin Until 2025
The Bank of England has confirmed it is still in consultations about building a Central Bank Digital Currency and does not expect a launch until 2025. The Government, the Bank of England and the UK regulators have already announced their hostility to stablecoins (cryptocurrencies with low volatility) and will likely seek to regulate (kill) any projects that qualify as stablecoins.
Last year we saw universal condemnation of Facebook’s proposed stablecoin (Libra). Governments were quick to shut this project down as it was a threat to their financial systems. We expect hostility towards stablecoins will continue until governments are comfortable they can create a monopoly with their own coins (assuming they can).
Biden Just Signed The Infrastructure Bill
Biden just signed a $1.2 trillion infrastructure bill (down from $3.5 trillion). This bill includes some nasty surprises for American crypto traders.
The new law requires brokers (Exchanges) to notify the Inland Revenue Service (IRS) directly of crypto transactions of all American citizens. This will create some serious challenges for many crypto investors who use their own wallets as the IRS will only be getting a limited view on what these investors paid for crypto in the first place. The onus will be on the individuals to piece together all of their transactions and explain everything to the IRS. Inevitably some investors are going to get stung BADLY by this but there are packages out there (Coinigy for example) that can help individuals piece it all together.
What next? We expect to see decentralised exchanges (with no accountability and no personnel to imprison) to explode in popularity as traders seek to keep their crypto away from the IRS. As the IRS treats any coin conversion as a taxable event investors buying NFT’s, engaging with Defi or swapping coins are creating a catalogue of taxable events.
This will get messy.
Bitcoin Spot ETF Rejected
Vaneck’s Bitcoin Spot Exchange Traded Fund (ETF) was rejected by US Regulators on Friday. An ETF is a passive investment vehicle that tracks the price of a chosen asset. As this was a Spot ETF this vehicle would have had to buy and hold Bitcoin for its investors. Preston Pysh, host of The Investors Podcast stated:
Here’s the beauty folks. Bitcoin gives 2 shits about the approval of a spot ETF. It costs nearly nothing to custody and it settles in 10 min. They are fighting a clock – tick, tock, tick…This thing literally feasts on corruption and manipulation and boy is the plate full.
This rejection is in contrast to a Proshares Strategy ETF that took in a record $1bn volume in the first week of its launch. The Proshares ETF is based on futures and does not need to hold Bitcoin on its balance sheets.
There are 2 additional Spot ETF applications in the pipeline from larger companies which should be getting a verdict in December.
Santander Bank To Offer Bitcoin ETF To It’s Spanish Customers
This move apparently makes Santander the only institution to offer this type of product to it’s customers.
ETF Opinion
ETF’s are useful as they can be held in tax wrappers (Pensions & ISAs) in order for the holder to gain exposure to the crypto price movement whilst benefitting from tax benefits. That being said you never own the crypto yourself and have no power to move it or store it.
While ETF’s will be useful for some investors Bitcoin and the other cryptocurrencies do not need ETF’s to be successful. Anyone can create an account at one of the mainstream exchanges (Coinbase, Kraken, Binance etc) or set up a wallet to buy crypto. You never own the crypto within an ETF. By choosing a product like this over taking responsibility for your own wealth you are delegating the responsibility for looking after your money to a 3rd party. As the whole crypto movement is built on cutting out the middlemen (banks etc) by buying a product like an ETF you are giving them the chance to charge you for acting as custodians.
An ETF or any other product wrapper is unnecessary faff which adds nothing to the crypto industry and provide oxygen to the old financial system.
Let it die already.
Bitcoin ‘Taproot’ Upgrade Activated
On 14th November 2021 at Block height 709,632, the Bitcoin Taproot upgrade was activated. The taproot upgrade incorporates 3 improvements:
Schnorr - a faster, more secure, less data intensive method of providing digital signatures (proving you own the private key to your wallet without having to reveal it).
Taproot - A new way to send Bitcoin that enhances privacy and flexibility. it also reduces transaction fees, minimises memory usage and improves Bitcoins Scalability
Tapscript - An update to the Bitcoin coding language
This is all good news for Bitcoin and should further improve the network and its capabilities.
Until Next Time
The Wealth Gap