Nigerians are thought to be accumulating foreign currencies which they believe will protect their wealth from the naira’s volatility as well as the surging inflation. Further, as a research paper in a journal published by the Central Bank of Nigeria (CBN) found, Nigerians’ use of dollars exceeds IMF’s 30% threshold. Exchange Rate Volatility and Currency Substitution According to a report, this preference for foreign currencies (or currency substitution as CBN economists call it) however, needs to be contained in order to maintain the effectiveness of the central bank’s monetary policy. Remarking on the importance of curbing this currency substitution phenomenon, three CBN economists said: Higher real-exchange rate volatility is associated with an increased level of currency substitution. (Therefore) there is a need to contain “exchange-rate volatility and inflation as a way of curbing the spate of currency substitution in the country. Meanwhile, the report also quotes the economists explaining how one measure of currency substitution, “the ratio of foreign cash deposits to naira deposits on-demand in the banks exceeded the IMF’s 30% threshold from 2009 following the global financial crisis.” According to the researchers, this ratio only “hit a peak of 98.2% in 2014 before declining to 83% in 2018.” IMF Threshold Nevertheless, the broader measure of foreign currency in banks to naira savings, demand and term deposits “stayed largely within the IMF limit over the study period from 1995 to 2018.” On the other hand, Nigeria’s inflation rate quickened “to the highest level in four years in March and is now more than double the 9% limit of the central bank’s target range.” In the meantime, as part of its response to the currency substitution phenomenon, the CBN has previously asked: “merchants to stop offering local goods in foreign currency.” The central bank also “banned the practice of accessing the foreign-exchange market for settling domestic transactions.” However, in early February of 2021, the CBN’s war against currency substitution was broadened to include cryptocurrencies. Just like foreign currencies, cryptos also act as a hedge against inflation and currency depreciation. Meanwhile, the three Nigerian economists believe that diversifying the economy “should be of paramount interest to boost the base for foreign-exchange earnings.”
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national court of spain takes the investigation of the alleged ponzi crypto scheme arbistar/5/13/2021 The investigation against an alleged major Spanish Ponzi crypto scheme will now be in charge of the National Court of Spain. A judge from the national legal instance is now taking the investigation of Arbistar after the inhibition of a judge in Tenerife. Economic Damages Could Reach Over $120 Million According to El País, judge José Luis Calama agreed to investigate Arbistar 2.0 SL, as victims of the alleged scam are almost 1,127. Still, authorities believe the number could be as high as 32,000. As a worrisome fact for the judge, said El País, the amount of money stolen on the alleged Ponzi crypto scheme could be over 100 million euros ($120 million). However, law enforcement has accounted for over 41 million euros ($49.26 million) in damages as of press time. That said, Calama pointed out that Arbistar could be the “biggest scam in Spain” related to cryptocurrencies, considering that the bogus crypto trading bots platform allegedly had victims in 30 of the 50 Spanish provinces. Santiago Fuentes, the head of Arbistar, is under probation. Together with his accomplices, he could have been involved in aggravated fraud, criminal organization, and continued crime of falsification of commercial documents said a judge of the Central Court of Instruction 4 previously. Two of the Arbistar’s members, who were at large and wanted by the Interpol, reportedly surrendered before the Spanish authorities, said El País. Victims Are Not Only Based in Europe but Also in Latin America Judge Calama’s words on Arbistar are not a new statement given in the context of the case. Carlos Aránguez, a Spanish lawyer who represents 130 victims of Arbistar, commented in December 2020 that the magnitude of the disaster provoked by the alleged crypto Ponzi scheme could be qualified as the “biggest computer scam” in Spain. Victims represented by the lawyer are located in Mexico, Venezuela, France, Andorra, and almost 20 Spanish provinces, who claimed to had invested into the Arbicorp’s bots — the firm that owns Arbistar — and which promised yields of approximately 28%. But suddenly, the firm announced the freezing of accounts belonging to over 120,000 investors on September 12, 2020, due to an alleged “failure” in one of its crypto trading bots. The Biden administration has revealed plans to raise taxes on investors who are millionaires according to a flurry of recent reports. President Joe Biden wants to overhaul the U.S. economy in order to help fund American childcare and education. Biden’s proposal will almost double the current capital gains tax rate from 20% to 39.6%, and for some investors, the tax rate could be as high as 43.4%. Biden’s Capital Gains Tax Rate on Wealthy Individuals Could Climb as High as 43.4% Fresh off the heels of proposing new stimulus in order to bolster the American economy, President Joe Biden is also planning to increase the tax rate on wealthy individuals with $1 million or more. The increased capital gains tax will jump to near double for some individuals and possibly even 43.4%. Every report disclosing the capital gains matter stems from people who are familiar with the proposal but wish to remain anonymous. Currently, U.S. capital gains taxes are around 20% and the marginal rate of 39.6% is meant to be applicable to wealthy Americans. Proposed capital gains tax increase? I hear Puerto Rico is nice this time of year… — Jameson Lopp (@lopp) April 23, 2021 Further, the 3.8% tax on capital gains will also be tethered to the 39.6% in order to bolster Obamacare funding. Biden started talking about overhauling the tax code in more depth during the first week of April, as his administration hopes to raise $2.5 trillion in revenue during a 15-year span. On Thursday afternoon while stock markets were open, traders started to sell off stocks and bonds. Ten-year Treasury fell and stocks like the S&P 500 Index saw some losses as well on Thursday but stocks and bonds rebounded Friday morning. Joe Biden's Proposal to Double Capital Gains Tax Rate Shakes Financial Markets Bitcoin (BTC) and a number of crypto assets took some losses as well after the tax news began to spread. On Thursday, BTC fell from a high of $55,186 per unit to a low of $47,555 at 3:45 a.m. (EST) on Friday. BTC is currently trading just below the $50k range and the only crypto asset that did not get routed was ethereum (ETH). Jeffrey Halley, senior market analyst, Asia Pacific, at OANDA noted that BTC’s slide in value stemmed from Biden’s tax overhaul proposal. “Bitcoin headed South today after President Biden signaled that he wanted to raise capital gains tax in the U.S.,” Halley explained on Friday. “Now whether that happens or not, many bitcoin investors are probably sitting on some substantial capital gains if they stayed the course over the past year. “I firmly believe that developed market regulation and/or taxation remain the crypto markets’ Achilles Heel.” Since Thursday’s revelations about the tax hike went viral, the crypto economy has rebounded a hair as well, but many digital assets haven’t fully regained all the losses. “We can most likely attribute bitcoin’s sharp decline to the fact that U.S. investors are facing a capital gains tax if they sell the cryptocurrency after holding it for more than a year amidst reports that President Biden is contemplating doubling this for the wealthy,” Don Guo, CEO at Broctagon Fintech Group told Bitcoin.com News in an email. “Further, investors will see the price drop across the crypto market as an opportunity to widen their portfolio by averaging up their investment outlay and buying in new altcoins such as ethereum,” the executive added. Guo further commented: Therefore, likewise for bitcoin, a further drop is unlikely as the big conglomerates will see it as an opportune moment to make their entry in acquiring bitcoin while prices are relatively low. White House Press Secretary Says Plans Are Still Being Finalized President Biden revealed his efforts to up the capital gains on wealthy individuals while campaigning. Individuals who are against the idea have complained that a million dollars doesn’t necessarily make a person ‘wealthy’ these days. Detractors have said that this will place a burden on people who don’t have much wealth and the extremely rich will simply find loopholes. White House Press Secretary Jen Psaki discussed the tax reform during her briefing on Thursday with a quick response to a reporter’s question. “We’re still finalizing what the pay-fors look like,” Psaki told the press. Meanwhile, Republicans are fighting for the tax cuts imposed by former President Trump and may try to stop the proposal in its tracks. The Biden administration also wants to increase the estate tax for wealthy individuals as well. Americans making $400k or more annually could pay more on estate taxes in order to help pay for the “American Jobs Plan.” The famous author of The Black Swan, Nassim Nicholas Taleb, says investors should not buy bitcoin. To hedge against the current turbulent market, he advises buying stocks or real estate, emphasizing that bitcoin has no connection to inflation or “anything economic.” Nassim Taleb Advises Against Bitcoin Investing Nassim Nicholas Taleb, the famed author of “The Black Swan,” has shared his view on bitcoin and on how to hedge against the current turbulent market in an interview with CNBC Friday. Taleb is a Lebanese-American scholar, mathematical statistician, former options trader, and risk analyst. He was asked about cryptocurrency, particularly bitcoin, given that investors have been increasingly restructuring their portfolios with this asset class. Regarding bitcoin, “It has the characteristics of an open Ponzi scheme. Everyone knows it’s a Ponzi,” he claims, adding: Basically, there is no connection between inflation and bitcoin. None. You can have hyperinflation and bitcoin goes to zero. There is no link between them. Admitting that bitcoin is “a beautifully set up cryptographic system,” Taleb insisted that “It’s well-made but there is absolutely no reason it should be linked to anything economic.” “If you want to hedge against inflation, buy a piece of land,” he advised, adding that one can “grow olives on it. You’ll have olive oil.” He continued, “Of course, the best strategy for investors is to own things that produce yields in the future.” While a number of analysts support Taleb’s theory that bitcoin is not an inflation hedge, some believe otherwise. Investment bank Goldman Sachs said in December last year that “bitcoin is the retail inflation hedge,” noting that it “is replacing gold as the inflation hedge of choice.” British investment management firm Ruffer wrote that bitcoin “acts as a hedge to some of the monetary and market risks that we see.” Deutsche Bank observed that there “seems to be an increasing demand to use bitcoin where gold used to be used to hedge dollar risk, inflation, and other things.” Concluding Friday’s interview on how to hedge risk in today’s market, Taleb said: Stay out of bitcoin. Buy stocks that are stable and buy things you understand. He also reiterated that investors can also “Buy a piece of land” and grow something on it, like in his earlier olive example. The famous author was initially a bitcoin proponent, believing that BTC can be used as a currency. However, when he saw that the price of bitcoin is very volatile and investors are using the cryptocurrency as a vehicle for speculation, he started selling off his bitcoin and began calling it a failed currency. The U.S. Marshals Service has published a contract showing the crypto custodian Bitgo has been chosen to manage law enforcement’s seized bitcoin acquired through criminal forfeiture. The contracted deal is $4.5 million for the storage, maintenance, and disposal of cryptocurrencies according to documents released on Wednesday. USMS Pens a Deal With Bitgo During the last ten years, the U.S. government has seized a substantial invest in bitcoin amount of bitcoin (BTC) and other digital assets from criminal forfeiture cases. Traditionally, the U.S. Marshals Service (USMS) has been in charge of these funds stemming from high-profile cases like the Silk Road marketplace investigation. Since 2019, the USMS has been in search of a recruit or a custodian that can manage the crypto assets seized by the U.S. government. The government entity published another offering on April 24, 2020, for a contract worth $4.5 million. “The United States Marshals Service (USMS) has a requirement for storage, maintenance, and disposal of seized/forfeited virtual currency,” the USMC’s original solicitation notes. “The purpose of this contract is to provide the full range of virtual currency management and disposal services. This includes but is not limited to such activities as accounting, customer management, audit compliance, managing blockchain forks, wallet creation and management, private encryption key generation and safekeeping, backup and recovery of private encryption key material, airdrops, etc., as well as future actions associated with the virtual currency forfeiture process.” Over $4.5 Million for Managing Crypto Seized in Criminal Forfeiture On April 21, 2021, the contract was awarded to Bitgo, the digital asset trust company and security company, headquartered in Palo Alto. The length of the contract has not been disclosed in the contract filings. Prior to Bitgo’s partnership with the law enforcement agency, the USMC, FBI, and Department of Justice handled storage and auctions. Just recently, the department revealed it had seized over $1 billion in bitcoin from the Silk Road marketplace. The criminal forfeiture stemmed from a person dubbed “Individual X” and it is assumed https://secretstradingbitcoin.com/podcast/ that the person may be one of the rogue agents who got caught stealing bitcoin during the investigation. The company founded by Mike Belshe and Ben Davenport in 2013 has grown a great deal since Bitgo’s inception. The firm already manages billions of dollars worth of crypto assets and is the custodian for the Wrapped Bitcoin (WBTC) project as well. The BTC held in custody for the WBTC project is approximately 156,087 BTC according to Dune Analytics stats. The deal with the USMS may see Bitgo dealing with a significant sum of cryptocurrencies from ill-gotten gains going forward. The Palo Alto company will get $4,549,672 for dealing with the U.S. government law enforcement agency and meeting the contract requirements. |