Cryptocurrencies
The federal government has presented a new draft that would force cryptocurrency providers in Germany to impose further requirements. According to this, service providers should in future collect and transmit data about clients and recipients during a transfer.This project is summarized as the crypto value transfer ordinance. The draft can be viewed online. One would like to close a "gap in the traceability" in the transfer of cryptocurrency. In addition, the government wants to "reduce the risk of using crypto values for money laundering and terrorist financing". In detail, the name, address and the address of the wallet for authorities should be saved. Transactions between hosted wallets at service providers and transfers between service provider wallets and all virtual purses without providers would be affected.
Experts are already criticizing the government's plan. Bundestag member Frank Schäffler of the FDP described the draft as a "step in the wrong direction" - as can be seen in the current report by "heise.de". The politician fears that, due to such rules, customers would then switch to providers abroad or even to the unregulated market. The digital association Bitkom also writes in a statement on the draft of the federal government about major damage to Germany as a financial center.
Since the beginning of 2020, providers of crypto currencies have had to apply for a license from the Federal Financial Supervisory Authority. Service providers have to save the data of their customers in a database and report suspicious cases.
Major Cryptocurrencies—Including Bitcoin, Ethereum, Dogecoin—Plummet As China Widens Crackdown
ToplineThe value of major cryptocurrencies—including bitcoin, ethereum, cardano and dogecoin—plummeted Monday after Beijing renewed efforts to rein in the sector and severed power to bitcoin mines in Sichuan province over the weekend, one of the country’s largest producers of the digital currency.
A mining farm, video cards and asiki mining farm.
gettyKey FactsBitcoin fell around 9% early on Monday morning after Chinese officials targeted bitcoin mines in the key province of Sichuan, part of a wider crackdown on the process through which computers solving complex problems consume huge amounts of electricity.
China is the source of the majority of the world’s cryptocurrency trade—a 2020 study found it to account for nearly 80% of global bitcoin operations—and Sichuan is its second most intensive mining region.
Local authorities claim the latest crackdown has cut the country’s bitcoin production by more than 90%, according to state media the Global Times.
The move seems to have precipitated a sharp decline in bitcoin’s hashrate, the computational power used to mine and process bitcoin transactions.
The fall caused bitcoin to drop to its lowest value in nearly two weeks, falling below $33,000 a token for the first time in 12 days.
Other major cryptocurrencies, which often mirror bitcoin’s movements, also fell Monday morning, with ether, cardano and dogecoin all losing between 5-6%.
Key BackgroundThe abundance of cheap electricity in China made it an ideal location to pursue energy intensive bitcoin mining. With a great deal of this energy coming from coal power stations—an incredibly dirty source of energy—the industry is at odds with China’s new climate goals. It is also a source of unease in the crypto community, most notably with Tesla billionaire Elon Musk, who brought about a market collapse when he announced the company would no longer use the asset until it cleaned up its footprint. Beyond the environmental impact driving the current crackdown—which has also seen mines closed in Inner Mongolia and Xinjiang—China is also keen to prevent cryptocurrencies from “infringing” upon financial order, prompting a ban on financial services facilitating crypto trade.
What To Watch ForThe cryptocurrency market has still not recovered from when China announced its intensifying regulatory crackdown on cryptocurrencies in mid-May (an event that coincided with Musk’s environmental worries). The market’s total value, now around $1.4 trillion, is around 56% of what it was just over a month ago.
Further ReadingBitcoin slumps in wake of China crackdown (Reuters)
Musk Denies Bitcoin ‘Pump And Dump’—And Says Tesla Will Resume Transactions Once This Mining Goal Is Reached (Forbes)
China Cracks Down On Crypto Business, Saying ‘Speculative’ Trading ‘Seriously Infringing’ On Financial Order (Forbes)