Daily Digest 2/1
Insight on what’s moving the markets today. “Neither this post nor any other on cryptofal.com should be taken as financial advice. It is not.”
Biden wants US to regulate crypto as matter of national security
The Biden administration has been looking to regulate the cryptocurrency space since they took office. We knew coming into the year that this was going to be something to look for after an almost meteoric rise in popularity that cryptocurrencies received during the covid days. The space does need regulation but it should be something that is carefully considered before doing so.
The administration is now considering the cryptocurrency industry a matter of national security. What that means now is that a lot more resources will be put into giving certain parts of the government tasks involving the analysis and piecing together a regulatory framework. This would cover all areas of cryptocurrencies from stablecoins to NFTs. Within the next 6 months, Biden’s cabinet will be directing agencies in an attempt to propose a framework by then.
Right now there are too many different agencies with different ways of handling crypto-related matters and that affects the traders and exchanges just as much as these agencies because no one is on the same page. Not even members of his own cabinet are on the same page on this one showing that there is a disconnect between the older and younger generations.
Putting out a uniform framework will hinder the growth of the technology going forward. Different tokens operate differently inherently based on what they were built for. Some are to be used as securities and others are made for utility so having the same framework for both would not be what is best for both. This will probably take some time before we see these agencies like the SEC and CFTC or even countries to figure out a way to approach this situation in a way that benefits everyone.
India Edges Toward Crypto Legalization With 30% Tax, Announces Digital Rupee
Finally, we have a country that has decided to make it clear how they plan to tax people on their crypto earnings. India is thinking a 30% tax on any income that they make on cryptocurrencies. This also comes with the news that the country’s digital Rupee is on pace to be released this year as well.
“There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime," Nirmala Sitharaman said in the Indian budget speech. Many countries are making the transition to digital currencies as the value of their dollar continues to get hit by inflation like Venezuela, Argentina, and Turkey.
This would be another step in the right direction for continuing to make crypto legitimate in the eyes of regular people and other governments. Nischal Shetty, the founder of the most popular crypto exchange in India, thinks that India’s plan to release the digital Rupee is actually what will "pave the way for crypto adoption." Others; however, think that 30% might deter retail investors from getting involved citing that it may be too high a percentage.
The news is certainly still good for the market whether you think 30% is too much or too little to put on growing technology. Just like most other countries probably are, India is waiting for more of a consensus globally on what to do with cryptocurrency regulations. Crypto people in the country had previously lobbied for the government to classify cryptocurrencies as well as tax clarity like they have presented today.
Solana has had a tough couple of months on the scaling side with a couple of outages that resulted in the blockchain being shut down and users not being able to complete transactions for hours at a time. That being said SOL is having a pretty strong day up about 10% at the time of writing.
This surge can be attributed to the fact the two tokens that are built off of the Solana ecosystem were just listed on Coinbase. Both tokens that were listed, Bonafida (FIDA) and Orca (ORCA), are decentralized exchanges for swapping other Solana-based functions. These are Solanas's direct competitors to Ethereum’s faltering Uniswap.
No matter the struggles that Solana has had recently they continue to be one of the frontrunners to eat away at Ethereum’s market share. They still have a growing community and ecosystem that is clearly going somewhere based on these listings. There are no Cardano dapps on Coinbase nor is there any Polkadot tokens on there. This may change in the future but it just proves that maybe SOL can’t handle the transactions it says it can but could be the ideal platform for NFTs but we will have to see what happens.