The central bank admitted that it is looking closely at the development of cryptocurrencies. Its president, Jerome Powell, responded to congressmen that support a new form of money.

The US Federal Reserve system is analyzing the possible benefits, costs, and implications of issuing a new central bank digital currency or “crypto-dollar.” The President of the central bank, Jerome Powell, stated in a letter to two congressmen that, although no digital currency is currently being developed, the institution is carefully analyzing how such initiative would be applied in the world’s first economy.

Powell said that they are aware that several central banks worldwide are considering this possibility, but each has different realities, as does the United States of America. When addressing lawmakers French Hill and Bill Foster, Powell does not attack cryptocurrencies or their technological innovation, but rather is more concerned about the consequences that they could bring to the American nation.

The executive stated that the issuance of a central bank digital currency for general use would raise important legal, monetary policy, payment, financial stability, supervision and operational issues that should be carefully considered. However, he explained that the Federal Reserve will continue to analyze the possible benefits and costs of digital currencies.

Regarding the reach that cryptocurrencies such as Bitcoin have had in recent years, Powell said that the central bank is closely monitoring this development. In other words, the main financial figure of the United States is exploring whether it makes sense to issue a cryptocurrency, which could undoubtedly confront obstacles in Congress itself, the banking system and other regulatory entities.

Dollar Dominance

Powell responded to the congressmen 50 days after they both signed a letter in which they expressed concern that the US dollar would lose dominance over the cryptocurrency projects of other nations, among which they named Sweden, Uruguay, and China.

The legislators feared the possibility that the primacy of the US dollar may be in long-term danger from the widespread adoption of fiat digital currencies, whose potential development is not limited to smaller economies.

It is striking that the congressmen would be pressing for the United States not to be relegated in terms of the issuance of a cryptocurrency aimed at daily use, as is currently done with the dollar.

The officials’ uncertainties may have increased in recent months following the announcement by JP Morgan Chase Bank to create their dollar-anchored cryptocurrency, JPMCoin.

Another project is that of Wells Fargo, which seeks to accelerate international transactions between its branches, using a private blockchain called Wells Fargo Digital Cash. However, in this case, a stablecoin or anchored cryptocurrency is not used but tokenized dollars of which no further details were offered.

Another element that could have influenced was the presentation of Libra, the cryptocurrency released by the Libra Association led by Facebook, from which several of its partners have already withdrawn.

The president of the Federal Reserve of Philadelphia, Patrick Harker, said last October that, sooner or later, the United States will have to develop its cryptocurrency and estimated that in about five years the country could have its own payment system based on this technology.

It should be remembered that in August 2019 the Federal Reserve disclosed that it was advancing a project called FEDNow Service, a real-time mechanism to modernize the local payment system.

By Willmen Blanco

The travel and tourism industry keeps getting involved with the blockchain technology, taking advantage of the immutable ledger to project enhanced transparency and trustworthiness in its processes and operations.

In this case, a company named Travala is allowing its clients to make reservations in any hotel found in the famous platform Booking.com. Travala is known around the industry for being a service that lets customers to provide crypto payments in exchange for tourism packages and goods, mainly hotel rooms.

The development was announced via a press release in recent hours by the crypto booking enterprise. It was also revealed that Travala already finished the integration process to accomodate Booking.com on its platform. Travelers around the world are surely getting the news with open arms because now they will be able to book more than 90,000 different destinations while paying with digital assets.

A Proprietary Token and Other Payment Methods

Now, there are several payment methods when it comes to bookings made via the Travala platform. First of all, users can employ the system’s proprietary token, AVA, as the primary way of completing operations.

However, the ecosystem also allows paymens with other known crypto assets, such as Bitcoin (BTC), Ether (ETH), Dash (DASH), Bitcoin Cash (BCH), Litecoin (LTC), EOS, Stellar (XLM), Cardano (ADA), Binance Chain (BNB), Monero (XMR), Tron (TRX), XRP and Dai (DAI).

According to the company’s CEO Matt Luczynski, “this partnership allows our users to access Booking.com’s accommodation listings, as well as the listings from several other leading travel suppliers, which is a fantastic use case for our own AVA token and another huge step towards mass cryptocurrency adoption.”

In a separate development, Travala also revealed that the AVA token, its native coin, was listed on the decentralized platform Binance DEX and it is currently available to trade against Binance Coin.

Blockchain and Crypto-Friendly

The travel and tourism sector is continually feeding on contributions from the blockchain technology and is also increasingly using cryptocurrencies as payment options, given the massive adoption of these digital assets in lots of countries and populations.

For example, just a few days ago, a UK-based travel firm named Alternative Airlines established a strategic alliance with crypto service Utrust to facilitate payments with digital assets.

Also, over the summer, executives and founders of Norwegian Air, an air carrier from the Scandinavian region, revealed that it had the goal of launching its cryptocurrency exchange, and that the platform would be used as an avenue for the airline to accept payments with digital assets.

Travala is famous its crypto-friendly booking service of over two million properties in 230 nations around the world. It is very well-known among travelers that use cryptocurrencies to pay for rooms.

Meanwhile, Booking.com is a market-leading booking platform that was established in 1996 in Amsterdam, Netherlands. It is now one of the biggest and most prominent travel e-commerce companies in the world. It currently employs over 17,000 employees in 198 offices in 70 countries.

By Andres Chavez

China announced an update to its regulation on the use of cryptocurrencies. Bitcoin’s price dropped from USD 7,200 for the first time since May.

The price of Bitcoin (BTC) fell approximately 10% in recent days. The value of the main cryptocurrency in the market went from being close to USD 8,000 to being below USD 7,200 for the first time since May 2019.

At the time of writing this article, the price of BTC is USD 7,155, according to data from CoinMarketCap. At its lowest point on November 22^nd, the price remained just above USD 7,100. Since May 17^th, specifically, the price of Bitcoin had not fallen to such low levels.

That drop in the price of Bitcoin caused the entire cryptocurrency market to suffer. Even other cryptocurrencies in the top 20 according to their market capitalization have larger percentage losses. Such is the case of NEO, which has -13.94% at the time of writing this note.

Other cryptocurrencies with losses greater than 10% on November 22^nd are Chainlink (LINK), Ether (ETH), Bitcoin Cash (BCH) and EOS. Only two of the cryptocurrencies did not record losses of at least 5% between November 21^st and 22^nd. These are Unus Sed Leo (LEO) and Tezos (XTZ), with a fall of 2.42% and 4.45%, respectively.

Fall Due to China

One of the reasons for this abrupt market decline may have been an update issued on Thursday, November 21^st, by the People’s Bank of China due to its regulatory stance against the use of cryptocurrencies. In this update, the Chinese government announces a resurgence of its policy against cryptocurrency exchange houses.

It was also announced that the Chinese authorities are investigating a list of at least 39 cryptocurrency companies that would be operating illegally, bypassing the restrictions in force in the Asian country. Precisely, China is in a crusade against possible scams associated with blockchains and cryptocurrencies.

According to Dovey Wan, cryptocurrency ecosystem analyst focused on the Asian market, the companies mentioned on the list are probably Ponzi schemes or other types of scams. Via Twitter, Wan said that this was a logical conclusion, considering that the investigation arose from the locality of Shenzhen, commonly associated with this type of scheme.

The analyst added that the exchange houses that have been used by the alleged scams could also be affected by the investigation that is being conducted at the moment.

Bitcoin’s Price Floor Shakes

Amid cryptocurrency market volatility, predictions about possible movements abound. Recently, analyst Willy Woo, one of the most prominent for monitoring the cryptocurrency market, expressed his vision of a possible price floor around USD 7,000 for Bitcoin.

A report by the firm Delphi Digital also establishes a possible price floor relatively close to USD 7,400. Although the low on Friday, November 22^nd, placed the price of Bitcoin below that figure, the range is still close.

Other analysts are less optimistic about the future of the main cryptocurrency. For example, Peter Schiff, stockbroker and president of Euro Pacific Capital, expects a total price collapse. This is nothing new, given that Schiff has historically been one of the biggest critics of Bitcoin.

By Willmen Blanco

The regulation was issued by the headquarters of the Central Bank of China in Shanghai. Apart from ICOs, other cryptocurrency crowdfunding models will now be illegal.

The headquarters of the People’s Bank of China (PBOC) in Shanghai published last November 22^nd an update to its rules to restrict cryptocurrencies in the territory. A few days earlier, in Beijing, local financial authorities had indicated the illegality of cryptocurrency exchange operations.

According to the information, the PBOC’s authorities in Shanghai, a municipality that is considered the main commercial and financial center of China, hold that they have observed the resurgence of cryptocurrency-related operations. For that reason, they decided to take tougher measures to strengthen regulation and control and reduce cryptocurrency trading.

In a statement, the PBOC stated that the issuance, financing and trading of virtual currencies involve multiple risks, so they ensure that they will take measures to rectify and withdraw these activities.

In his Twitter account, Dovey Wan, founding partner of Primitive Ventures, a firm focused on crypto assets, explained that the measures involve the illegalization of different forms of cryptocurrency crowdfunding models, similar to initial coin offerings (ICOs), which have been prohibited since 2017

Wan highlighted that, in addition to ICOs, figures such as initial futures offerings (IFOs), initial exchange offerings (IEOs), and initial security token offerings (ISTOs), are now banned in Shanghai. The PBOC considers them “unauthorized illegal public offering and securities issuance, potentially illegal fundraising, financial fraud, pyramid schemes and other crimes,” as written by the specialist.

Additionally, the Chinese financial authority says that it will immediately withdraw cryptocurrency trading platforms currently serving the Chinese market that are registered abroad. According to Wan, this implies greater regulation on exchange houses whose servers are located outside the continent but provide services to Chinese residents. Likewise, they will continue to strengthen “the cleaning of fiat payment and settlement channels and gateways,” said Wan.

Reinforcing the “Blockchain, not Bitcoin” speech held by the Chinese government, the document issued by the headquarters of the PBOC warns investors that they should be careful not to confuse “blockchain technology with cryptocurrencies.” Wan said that the information had been known since the weekend of November 16^th and 17^th and Chinese investors had expected a statement like this.

In 2017, China banned cryptocurrency operations in its territory; however, following President Xi Jinping’s recent declarations in favor of blockchain networks, interest in crypto assets increased significantly. As reported, the Chinese president’s public statements at the time boosted the actions of Chinese technology companies, and even the price of Bitcoin.

Another announcement released by Beijing’s local financial authorities takes a different direction, according to Melody He, who identifies himself on Twitter as co-founder and partner of The Spartan Group. He stressed that the entity, instead of a frontal prohibition as in Shanghai, chose to state that it had “never actually approved any branches of exchange houses.”

Melody He indicated that, despite this statement, OKEX and Huobi are headquartered in Beijing and their operations are fully monitored by the regulator, which suggests that they are “approved by Beijing.”

It should be noted that Bitcoin trade in China, using the anchored cryptocurrency or stablecoin Tether as a vehicle, had a rebound towards the end of the third quarter. According to data from Chainalysis, Chinese traders get access to Bitcoin through OTC (over-the-counter) cryptocurrency markets, in which Tether was used in 99% of China’s Bitcoin trade, displacing the yuan almost completely.

By Willmen Blanco

Pablo Hernández de Cos sees 6 areas in which banks could be affected by stablecoins. The executive believes that cryptocurrencies cause growing concerns about financial instability.

The governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, Pablo Hernández de Cos, said on Tuesday, November 19^th, at a meeting in Frankfurt, Germany, that banks could face up to six financial and non-financial risks if they decide to relate to stablecoins and proposals like Libra.

The Spanish financial executive noted that stablecoin initiatives prevail in the private sector and he cited, as an example, that of the Libra Association, a project led by Facebook that includes the participation of 22 companies from Europe and America.

In a hypothetical scenario, Hernández de Cos stated that banks could act as custodians of the assets that support stablecoins or manage those assets. They could also facilitate the operation of the stablecoin through resale and offer digital wallet services. However, this participation would entail potential risks for the banking system.

According to their function, banks could be subject to a wide range of financial risks (liquidity, market and credit risks) and non-financial risks (such as cybersecurity and data integrity or legal risks, among others), explained the Governor of the Bank of Spain during his presentation.

Income Reduction

Another aspect that was highlighted by the Spanish financial executive was that the business models of banks would be impacted by stablecoins. In other words, if users have the power to make transfers or payments without requiring the services of banks, these would not get any commissions for those transactions.

Hernández de Cos added that the emergence of stablecoins as a source of instant payments would compete for transfer commissions, which could dilute the flow of income on the basis of bank commissions.

In the event that banks became part of stablecoin ecosystem, they could face other difficulties in offering innovative products and services, something that startups, FinTech ventures and large technology companies already offer, stressed the governor of the Bank of Spain.

In the middle of this potentially adverse scenario for banks, the executive also noted that the Basel Committee on Banking Supervision considers that there is a continuous growth of platforms for the exchange of cryptocurrencies and related financial services, which translates into new concerns about potential financial instability, according to his criteria.

Volatility and Markets

Stablecoins have gained in popularity in the cryptocurrency ecosystem in recent years as they combine the characteristics of national currencies, to which they are related, and that of cryptocurrencies. Their main quality is that they eliminate the traditional volatility of the crypto market, but they maintain the low cost per transfer and a global reach.

There are three types of stablecoins: those that are supported by fiat currencies or products with a 1:1 parity with the US dollar, for example. In this group are Tether, TrueUSD, USD Coin and Digix Gold.

In the second group are those stablecoins that are collateralized with other cryptocurrencies with a 1:2 parity, for example, to minimize their volatility. Among them are Dai and BitUSD. In the third group are stable non-collateralized tokens that rely on smart contracts to decrease or increase the issuance of funds on the network, such as Basis or NuBits.

By Willmen Blanco

The announcement was made on November 20^th by Hudson Jameson, who warned that the date might change. In October the developers of the Ethereum network had agreed to activate the upgrade on December 4^th.

It was reported that the already delayed Istanbul upgrade of the Ethereum network now has a new tentative activation date. The developer Hudson Jameson of the Ethereum Foundation stated on Wednesday, November 20^th, that the process would take place on Saturday, December 7^th, but that that date might change due to the variable block times and the time zones.

The programmer also estimated that the change would be implemented at the height of block 9,069,000, so he urged node operators to upgrade their equipment before December 1^st in order to prevent any inconvenience.

Jameson announced that the Ethereum network will undergo the upgrade on the scheduled date. However, the developer warned that the exact date is still subject to change due to unpredictable factors. For that reason, he insisted on the need that users upgrade their nodes before December.

Node operators or ETH miners need to upgrade to the latest version of the Ethereum client, which includes Geth (v1.9.7), Parity (v2.5.10-stable), Besu (v1.3.4), Nethermind (v1.1.8), EthereumJS (v4.0.2), Trinity (v0.1.0-alpha.30) and Aleth (v1.7.1). It was also reported that the Harmony client (EthereumJ) will not offer support to Istanbul.

A few days before the activation, it is estimated that 27% of the node operators have already upgraded their clients, while the remaining 73% have not yet done it, according to real-time statistics handled by ether nodes.

Delays and Tests

Last October the developers of the Ethereum network had agreed that the tentative date to activate the upgrade would be December 4^th, but the day set for the change was delayed again without specific reasons. As it is a three-day delay, the elements that would have led to the decision may not be serious, considering that on the previous date for the upgrade it was estimated that the process would occur at the height of block 9,056,000.

It should be remembered that last February Ethereum activated the Constantinople and St. Petersburg upgrades after two failed attempts. With this antecedent, the programmers would be seeking to ensure that the activation is conducted without inconvenience.

Istanbul has already been tested in four testnets (Görli, Rinkeby, Kovan, and Ropsten) before its coming exit to the mainnet. Last September, during the tests in Ropsten, the upgrade was advanced and caused a fork in the network.

There is a total of six improvements that will be presented by the network in this first phase of the upgrade and were described as EIP-152 (the pre-compilation Blake2 F compression function was added), EIP-1108 (to reduce precompilation GAS costs alt_bn128), EIP-1344 (a ChainID operation code was added), EIP-1884 (price change for trie-size-dependent operation codes), EIP-2028 (reduction of GAS costs for calldata) and EIP-2200 (to balance the cost of SSTORE gas).

Users should be patient and take the necessary precautions before the Istanbul upgrade of Ethereum occurs. As the event is expected to occur without any inconvenience, it is worth waiting.

By Willmen Blanco