The Chilean Peso Is Still Falling Against Bitcoin Despite Its Recovery against the US Dollar

Alexander Salazar
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The Chilean Peso Is Still Falling Against Bitcoin Despite Its Recovery against the US Dollar

The Chilean peso has appreciated by about 20% against the US dollar since March 2020. The rise in the price of Bitcoin in Chile is similar in percentage terms to that of other countries in the region.

Although Chile’s legal tender fiat currency, the peso (CLP), is recovering against the US dollar, the recent rise in Bitcoin (BTC) combats the strength of the Chilean fiat currency. For that reason, the rise in the price of the cryptocurrency in the South American country maintains levels similar to those of other countries in the region; beyond the exchange rate between CLP and USD.

In recent days, the Chilean peso has maintained its recovery trend against the US fiat currency with almost 2% appreciation. Therefore, the CLP/USD exchange rate has fallen to levels not seen since 2019, below CLP 700 per US dollar.

Taking as a reference to the peak of March 2020, when the exchange rate was above CLP 860 per US dollar, the recovery of the Chilean peso becomes more evident. Since then, the revaluation of the Chilean peso against the US dollar has been almost 20%.

However, the rise in the price of BTC in the local fiat currency remains very similar to that of other less hard currencies in the region in percentage terms. Last week, the increase in Chile remained above 20%, with percentages very similar to the increase in Argentina (23%) and Brazil (24%). The rise in the price of Bitcoin against the Chilean peso has even been very similar in percentage terms to that of the euro, according to data from the Cryptomkt.com exchange.

The increase in the price of Bitcoin in the global markets in that period is around 25%. Despite the remarkable strength that the Chilean peso has shown in the fiat money environment, it falls against Bitcoin like the rest of the currencies.

In the last 12 months, the price of Bitcoin in the legal tender fiat currencies of Brazil and Argentina has risen by more than 500%. In Chile, the increase was 333%, according to data from CoinGecko. In the global market, the increase is around 370%, so the difference between the Chilean peso and the US dollar market is not very high.

Despite this trend, the devaluation of the Chilean peso against Bitcoin is evident in the long term. This issue is especially true when taking into account that last November, the price of Bitcoin in Chilean pesos broke the all-time high before that occurred in the global market.

“Cheap” Bitcoin in Chile

Some perceive a strengthening trend in the Chilean peso, but others see nothing but an opportunity to acquire a “cheaper” bitcoin for a limited time. Among the latter, the most prominent is Guillermo Torrealba, the CEO of local exchange Buda.com.

The executive considers that the rise in the Chilean peso against the US dollar slightly overshadows the increase in the price of Bitcoin in the South American country. “This situation ‘hides’ the effect of the rise in BTC, but what happens is that it is particularly cheaper to buy bitcoins with Chilean pesos because of the exchange rate,” according to Torrealba.

The Chilean peso is becoming stronger but other countries in the region do not have the same fate. Ignoring the paradigmatic case of the depreciation of the bolivar in Venezuela, there are equally unfavorable scenarios for fiat money in the region.

A recent example of this phenomenon took place in Colombia, where the peso (COP) is now equivalent to less than one satoshi, the smallest unit of Bitcoin. In other words, a Colombian peso is worth less than 0.00000001 BTC.

By Alexander Salazar

New Lawsuit that Ripple Faces Comes from One of Its Investors

Alexander Salazar
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New Lawsuit that Ripple Faces Comes from One of Its Investors

Tetragon requested the freezing of Ripple’s liquid assets. The plaintiff company led Ripple’s funding round in 2019.

Ripple Labs, Inc. and its co-founders Christian Larsen and Bradley Garlinghouse are now facing a lawsuit coming from one of their investors. This occurs after legal actions by the US Securities and Exchange Commission (SEC) that qualify XRP as a security.

In recent days, investment firm Tetragon Financial Group filed the lawsuit with a court in Delaware, USA. They are requesting reimbursement for the Series C shares that they obtained during a Ripple funding round at the end of 2019, which reached USD 200 million.

Similarly, Tetragon asked the US courts to freeze Ripple’s liquid assets until the company pays them what they consider to be their due, according to the UK-based firm.

Also, they requested an expedited legal process and a temporary Ripple.

Facing the lawsuit, Ripple did not wait to give a response. In a recent statement, the company says that they are “disappointed” in the action that Tetragon took.

“We are disappointed as Tetragon is trying to take unfair advantage of the lack of regulatory clarity in the United States. The courts will provide this clarity and we are very confident in our position,” the abovementioned statement said.

Ripple also notes that Tetragon can only opt for the return of its capital “if [the authorities determine] that XRP is a security in the future”, which has not yet happened.

In recent weeks, Ripple received an indictment for the sale of XRP to finance the activities of the company. The SEC considers that asset to be an unregistered security.

Ripple has reportedly raised at least USD 1.3 billion from the sale of XRP since 2013. Besides, the SEC accuses them of having used that asset to pay consideration.

The company stated that it is “a dangerous lack of regulatory clarity” and that the lawsuit is not only against Ripple. They add that it is “an attack on the entire cryptocurrency industry in the United States.”

At the time of writing this article, the third-largest cryptocurrency by market capitalization has accumulated around USD 11 billion, according to data from CoinMarketCap. Its current value is around USD 0.25, equivalent to a decline of more than 50% from the high of USD 0.69 that it recorded in 2020.

As a consequence of the SEC’s lawsuit, multiple exchanges withdrew XRP from their platforms fearing that this cryptocurrency could be illegal.

The exchanges that made that decision include Coinbase, OKCoin, B2C2, OSL, Beaxy, Bitstamp, Galaxy Digital, Jump Trading, 21Shares, CrossTower, Coinbase, Bitwise, Binance, and eToro.

A group of investors in the XRP cryptocurrency filed a petition with a US court for the modification of a complaint that the SEC filed against the technology company. They ask the agency not to consider their XRP holdings as securities.

In conclusion, Ripple and the SEC already have a date for their first appearance in court. On February 22nd, 2021, they will hold a pretrial conference with Judge Analisa Torres of the Southern District Court of New York.

By Alexander Salazar

1,600 Illegal Bitcoin Mining Farms got closed in Iran

Jenson Nunez
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1,600 Illegal Bitcoin Mining Farms got closed in Iran

The government is currently offering rewards to those who report clandestine Bitcoin miners. They have detected 500 illegal farms so far, thanks to the whistleblowers.

Iranian authorities report that since Bitcoin (BTC) mining was legalized in July 2019, they have shut down around 1,620 farms that operated in clandestinity.

Although the miners initially celebrated the legalization of their activity on Iranian territory, many of them were forced later to act outside the law. This is because the electricity rates that they must pay to mine Bitcoin are higher than the rest of the population, which enjoys state subsidies.

The Rewards were Used to Detect At Least 500 Illegal Miners

The situation in Iran regarding illegal mining is not new. In August 2020, a report appeared saying that about 1,000 illegal Bitcoin mining farms had been shut down. In July of the same year, the awarding of rewards (about USD 480) to those who reported on miners who operated in hiding had come into effect.

Mashhadi, in the abovementioned radio interview, explained that the Iranian judiciary has so far detected some 500 illegal farms thanks to the reports of the complainants. The reason for the rewards, he explained, is that TAVANIR “cannot detect all farms just by studying consumption patterns.”

According to the details of Iran’s Ministry of Energy,  and as reported by The Financial Tribune, “miners are currently charged 4,800 riyals (USD 0.11) for 1 kilowatt-hour, which is half the export rate of electricity in autumn, winter, and spring ». This is expected to change shortly, and there will be a significant rate increase: “Turnover is expected to be based on 19,300 riyals (USD 0.44) per kilowatt, double the price of electricity exported in summer.”

These electric power prices, while displeasing miners are among the lowest in the world. According to the GlobalPetrolPrices index, only Venezuela has electricity at a lower price than Iran, which is the fourth-largest oil producer in the world.

It would not be surprising if this increase takes place and sets its effectiveness; more Bitcoin and cryptocurrency miners will undoubtedly go underground, abandon their current work or even migrate to other sites to find a better environment to keep growing in the crypto world.

To obtain considerable profits with the development of this activity, it is necessary to have electricity at a low price. It is the only way they can mine bitcoin successfully.

This is why China is such a successful country. When it comes to a high dominion of mining, China, increases its rate every year, especially during reining seasons when the price of electricity falls lower than in other months or seasons.

By: Jenson Nuñez.

Grayscale Dumps XRP Funds; other exchange and investors also reject it

Jenson Nunez
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Grayscale Dumps XRP Funds; other exchange and investors also reject it

The CEX.IO exchange will suspend the trading of XRP for its US clients. A decline in addresses containing large funds in XRP was also reported.

Grayscale, one of the most relevant digital asset management firms in the financial sector, has just joined the long list of companies that turned their backs on Ripple, following the lawsuit that the Securities and Exchange Commission (SEC) from the United States recently filed against them.

Together with more than a dozen exchanges, the exchange house CEX.IO, and several owners simply made the choice and decided to distance themselves from the XRP market.

The news saw the light of day on January 5, after Grayscale executives confirmed that the XRP asset is no longer part of its Large Cap Digital Fund. “This market will no longer have the presence of the Ripple cryptocurrency for commercialization”. Also, the firm added that it has sold all the XRP reserves that were under its power.

Grayscale starts the year with the money obtained from the sale of XRP, and according to a series of tweets Grayscale is buying more bitcoins, ethers, and litecoins. Ripple’s assets represented 1.46% of the total Large Cap Digital Fund, according to national sources.

Although it was not mentioned in the official statement, it seems that the reason why Grayscale decided to suspend its XRP services is because of the SEC lawsuit. Before the litigation began, Grayscale executives confirmed that one of the most important authorized participants of the fund (Genesis Global Trading) decided to suspend all XRP trading.

Less than a month ago, the United States Securities and Exchange Commission (SEC) filed a lawsuit against Ripple executives on which the SEC accused Ripple of trading unregulated securities.

The authority determined that XRP is a security and not a currency, therefore this product needs registration before the law to be used in the United States; regulation that was not followed.

If the litigation in favor of the SEC ends and XRP is recognized as a security, all those companies that still market this asset could face a fine for violating the country’s financial regulations.

This has caused a rout of companies that have cut their relations with Ripple until news about its use arrives, highlighting among them exchanges of the stature of Bitstamp, Bittrex, Binance, and eToro.

One of the oldest exchanges leaves XRP aside

Although Ripple’s directive describes the SEC’s lawsuit as an attack against the cryptocurrency market, the reality is that more and more companies continue to report that they prefer to disengage from the XRP asset before being on bad terms with the United States government.

Among these cases, the exchange house CEX.IO stands out, one of the oldest exchanges in the market (since 2013). The platform announced this week that it will remove XRP from its list of assets in commercialization for all its clients residing in the United States, taking into account the legal process that the project is in with the US authorities.

By: Jenson Nuñez.

President of Santander Bank: “We Need to Eradicate the Advantage of Fintech Companies”

Jenson Nunez
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President of Santander Bank: “We Need to Eradicate the Advantage of Fintech Companies”

The executive believes that the current regulation favors technology companies. He also assured that the companies in the branch lend funds without complying with banking regulations.

For the executive president of Santander bank, Ana Botín, it is time to balance the playing field between the banking sector and the technology companies that keep their intention to finance the fintech companies. The executive said that this sector of innovations has a 10-year advantage over banks.

In an opinion piece published Monday in the Financial Times, Botín outlined three challenges for regulators: new guidelines for banks to finance more companies, a transition to make the financial industry environmentally friendly, and addressing the digital revolution.

“Big tech companies are turning into lending platforms without having to comply with most banking regulations. Their role, while still relatively small overall, is showing an increase and a big rate of growth. Last year, the credits of the fintech and big tech reached 795,000 million dollars worldwide, “said Botín, who assured that the COVID-19 pandemic will favor digital actors.

Rethinking the rules of the game would not be giving more advantages to the banks because these institutions would be behind, according to Botín. The executive president of Santander is convinced that the regulation is favoring the fintech companies and not the banking sector, especially on the subject of data management that governs payments.

On this point, he indicated that, according to European Union regulations, banks must provide fintech companies with access to customer data if the latter agrees to provide the information. For Botín, this requirement should apply to data held by all sectors, including technology companies.

The crisis comes from banks, not from bitcoin

The banker explained that the playing field should not tilt in favor of anyone and that the proposals before the European Commission require urgent action. However, Botín pointed out that it is not a question of discarding all the regulations that went to receive effectiveness after the financial crisis of 2008, but the rules need and must evolve.

The 2008 financial crisis that the executive cited happened for various reasons, according to a report by the US Financial Crisis Investigative Commission. The document states that the economic collapse happened due to bankers, politicians, and public officials.

Researchers pointed out in 2009 that the crisis could have been avoided, but that excessive risk-taking by banks and the negligence of financial regulators served as a trigger for the situation to get worse. Since then, new parameters for the financing and capitalization of banks are established now.

The debacle later led to the creation of Bitcoin as a digital system and cryptocurrency. Satoshi Nakamoto’s proposal would serve as an alternate mechanism to eliminate trusted third parties (banks) when carrying out transactions. Currently, bitcoin is an asset valued by investment funds, banks, and institutional capitals.

By: Jenson Nuñez.

More than 6,000 exchanges and bitcoin users stand against the FinCEN proposal

Jenson Nunez
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0
More than 6,000 exchanges and bitcoin users stand against the FinCEN proposal

In the last hours, Square joined the companies that reject the proposal. Jack Dorsey believes that the proposal would harm the industry in the United States.

More than 6,500 bitcoin (BTC) and exchange users responded to the proposal of the United States Office of Financial Crime Control (FinCEN).  Companies like Coinbase, Square, Kraken, Gemini, and a16z, among many others, oppose the Treasury requesting personal data from users who want to keep their bitcoins in self-custody wallets.

“This creates unnecessary friction and perverse incentives for cryptocurrency customers to bypass regulated entities for transactions,” Jack Dorsey said in a letter to FinCEN. In addition to being the co-founder of the social network Twitter, this developer is responsible for Square, a financial services company.

Another risk that the CEO of Square observes in the proposal is that it “will lead [customers] to use wallets or non-custodial services outside the United States, so as not to depend on a third party.” All this, as he explained, would add obstacles that would harm the industry.

The Square Company has part of its funds in bitcoin. For its CEO, who was insistent on the matter in the abovementioned letter, “the regulations that unnecessarily restrict the future of cryptocurrencies are deeply worrying.”

Dorsey dedicated a big part of the text to explain the differences between cryptocurrency transfers and money movements in traditional finance. He explained in every detail the “technological limitations that will make it difficult to identify and collect the information of the required counterpart.” One of these requirements, for example, is geolocation, which is usually not identifiable.

As an alternative, the founder of Twitter and Square highlighted anti-money laundering (AML) policies, which companies themselves already implement on their own and which, he said, “have exceeded those of legacy institutions.” This work was previously praised by FinCEN. In contrast, if the new proposal is applied, this would change.

“Flexible and risk-based regulation enables compliance programs to be more comprehensive and, in fact, mitigate risk through the use of tools compatible with blockchain technology,” said the sender of the letter. He added an example of how his company uses blockchain analysis to identify signs of illegal activity.

This attempt to regulate bitcoin use, is it a negative factor?

At the end of December 2020, the exchanges of Kraken and Coinbase had already spoken out on this topic. Among other observations, they rejected the deadline for submitting opinions that expired on January 4, a period that they considered insufficient.

More recently, Andreessen Horowitz, a venture capital firm also known as a16z, spoke out on the matter. He considered that FinCEN’s proposal “apparently aimed at combating financial crime, would require various crypto entities to collect and report detailed personal data of their clients, a standard that does not apply to any other sector of the financial industry.”

This company predicts that “such misguided regulation will have many foreseeable and unforeseen negative consequences.” For this reason, they ask FinCEN to withdraw the proposal or, at least, create an extension of the comment period as well as being also open to dialogue with the involved parties.

Bitcoin users also spoke out on the subject in a particular way. For example, this was the case with Edward Hearne, who identified himself as a trader and investor with 30 years of experience. He considers that the proposal is deficient, and its effects will foreseeably be undesirable for all parts of this industry.

By: Jenson Nuñez.

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