Cuba accepts Bitcoin
Cuba’s central bank has started accepting Bitcoin and other cryptocurrencies. A 26 August resolution signed by the Banco
Central de Cuba President, Marta Sabina Wilson Gonzalez, notes that the use of “certain virtual
assets in commercial
transactions” is now enabled throughout the Central American country.
The text of the law leaves the door open for the adoption of a range of cryptocurrencies
nationally, but local media
reported that both bitcoin (BTC) and ether (ETH) will be accepted as the two most recognised and
highest-value
cryptocurrencies.
It means Cuba is the latest Central American country to adopt cryptocurrency at a national
level.
The same circular lays out the central bank’s definition of cryptocurrencies:
Digital representations of value that can be transferred digitally and used for payments or
investments.
Translated from Spanish
The use of cryptocurrency is not mandatory, unlike in Cuba’s neighbour to the south El Salvador,
however the resolution
does recognise cryptocurrencies as a means of payment exchange for banks and institutions, and
says the central bank
will grant licences to crypto service providers.
Spanish-language cryptocurrency news website CriptoNoticas was first to report on the resolution.
Cuba’s GDP is currently $103bn annually, according to data from The World Bank, putting it on a par
with Ethiopia and
Morocco, and just behind European countries like Hungary and Greece.
Part of the reason for this national adoption of cryptocurrencies is likely to be the cost of
remittances. We already
know that reducing the cost of remittances is key to the evolution of Bitcoin adoption in
Central America and beyond.
And that is the assessment of the region’s development bank, the CABEI, in conversation with Reuters this week . CABEI is
offering El Salvador technical assistance on implementing the use of cryptocurrency.
Everyone is watching if it goes well for El Salvador and if, for example, the cost of
remittances drops
substantially...other countries will probably seek that advantage and adopt it. Guatemala,
Honduras and El Salvador are
the countries that would have the most to gain if the adoption of bitcoin lowered the cost
of sending remittances.
Dante Mossi, executive president, Central American Bank for Economic
Integration
Cuba’s move indicates that grand experiments using crypto are now accelerating at an
international level.
On-chain metrics show BTC, ETH holders unwilling to sell
Metrics compiled by data provider Glassnode show that long-term bitcoin and ether holders are
unwilling to sell their
coins.
The changing market behaviour indicates a bullish intent for both the Bitcoin and Ethereum
trading markets as we head
further into 2021.
In agreement with a minimal desire for long-term investors to spend coins, the Liveliness
metric for both chains has
entered a very strong downtrend [and] Bitcoin liveliness has re-entered a downtrend which
has accelerated during this
price rally. Ethereum supply shows a similar trend with a whopping 70% of the ETH coin
supply dormant for at least three
months. For both assets these uptrends in older coins supply commenced around March 2021,
which therefore reflects a
very strong demand to buy and hold throughout this bull market.
Glassnode, The Week On-Chain, 30 August 2021
‘Liveliness’ delineates whether more coin days are accumulated (investors hold BTC and ETH) or
destroyed (investors
spend their BTC or ETH) by total coin supply.
Downtrends in this metric suggest greater accumulation, where more dormancy and coin maturity is
building up, and less
spending is taking place. Steeper trends suggest stronger fundamental changes are at play.
Glassnode points out a structural downtrend in ‘younger’ bitcoin and ether being sold, which
suggests more holders are
clinging onto their BTC and ETH and not quickly returning it to the market.
Young coins are those created in the last three months, and are those most likely to be spent in
periods of market
volatility. Young BTC now represent only 15% of the total coin supply in circulation today.
SEC starts tracking DeFi
2020 was the so-called ‘DeFi summer’, when decentralised finance protocols broke through to the
mainstream, and
international media scrambled to understand markets with esoteric names, like Aave, MakerDAO and
Uniswap.
Decentralised finance (DeFi) is an umbrella term for a range of fintech developments that use
blockchain to enhance
existing financial tools, everything from lending and borrowing markets, to derivatives (futures
and options), yield
aggregators and insurance.
DeFi marketplaces — largely based on Ethereum — have continued to grow strongly throughout 2021,
even while media
attention has shifted to the new hot market of NFTs (also mostly based on Ethereum). DeFiPrime
records that the total
value locked in DeFi protocols is now approaching its all time high, at $84.1bn.
This new set of digital asset marketplaces allow people to trade and lend cryptocurrencies with
no middleman to set the
rules or siphon off fees. Instead, smart contracts, mostly executed using the Ethereum
blockchain’s virtual computer,
define the terms of lending, borrowing or derivatives trades, and carry out functions
automatically as soon as the
conditions laid out in code are completed, for example, depositing coins in a particular wallet.
Uniswap, DeFi’s largest
trading venue with around $1.8bn daily volume, for example, is a collection of around 30,000
smart contracts running
concurrently.
The appearance of these new tools has intrigued investors and regulators worldwide in equal
measure.
And now the US market watchdog, the SEC — the gold standard for financial regulators globally —
has signed a contract
with blockchain analytics firm AnChain.AI to track transactions using these platforms. According
to Forbes , the contract
is worth $125,000 per year.
The upshot is that America’s Securities and Exchange Commission is now watching the $85bn DeFi
market, with a view to
implementing greater regulatory oversight on decentralised finance platforms.
The SEC is now under the leadership of former MIT professor Gary Gensler, who notably taught
classes at the university
blockchain and cryptocurrencies and released the lectures free on Youtube in 2018.
DeFi developers write software to automate transactions and then leave the code to do its job,
allowing these smart
contracts to run without a central entity in charge. They tend to argue that this kind of
decentralisation defeats the
need for oversight by the SEC.
However, Chairman Gensler told the Wall Street Journal that Uniswap et
al each have features analogous to the kinds of
entities that the SEC already oversees.
There’s still a core group of folks that are not only writing the open source software, but
they often have governance
and fees...There’s some incentive structure for those promoters and sponsors in the middle
of this.
Gary Gensler, chairman, SEC
Markets
BTC/USD
Bitcoin’s bullish run slid off this week, with a total 1.3% loss against the US dollar across
the seven-day trading
session. $50,000 remains a statistically significant resistance level, with BTC topping out only
a few dollars shy of
the round number at $49,879.08. The market is yet to reproduce the kind of speculative risk-on
conditions that saw the
original cryptocurrency race to an all-time high of more than $64,000 in April, but Bitcoin’s
low point of $46,294.84 is
the highest weekly low since mid-May 2021.
Data as of 31 Aug 2021 | Source: TradingView
ETH/USD
Ethereum reached a 15-week high in trading this week, continuing the irrepressible bull run that
started with the London
hard fork. $3,000 remains a significant barrier for bears, as ETH traders showed
characteristically strong buying
support in this region. That said, price volatility appears to be contracting, with ETH moving
just 4.8% higher in total
against the US dollar this week.
Data as of 31 Aug 2021 | Source: TradingView
LTC/USD
Further down the cryptoasset chain, the $11.5bn payments protocol Litecoin saw 4% shaved from
its value against the US
dollar this week. From a starting point of $182.50, LTC crept up by 3.4% to 188.62, before
dipping slightly to end the
week at $175.13. Still, this point in time represents the higher echelon of value creation for
LTC, fully 68% higher
than its 2021 low of $103.
Data as of 31 Aug 2021 | Source: https://www.tradingview.com/x/YJJe859c/
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