ECB Calls for Global BTC Regulation, Digital Ruble in Question, ‘Stealing’ Gold’s Market Cap, More Crypto Investments in the US

In this edition:

  • ECB’s Christine Lagarde Calls for Tighter BTC Regulation
  • Russian Banks Concerned About Potential Digital Ruble Fraud
  • BTC Only Has Only 2% of Gold’s Market Cap for Now
  • US Financial Planners Are Keener on Investing in Crypto

Bienvenidos a la nueva edición de Weekly Crypto Roundup, mis Anchorianos. Yeah, I have no idea why I greeted you in Spanish, just felt like it. In any case, wherever you’re from, you truly are most welcome here!

Another exciting week is behind us; though BTC rollercoaster has decided to take a short break and not to pursue new giddy heights at the moment, we have some interesting events to talk about, nonetheless.  

Thanks to the very same bitcoin price jump, everyone is talking about it, even the European Central Bank. We’ll mention developments regarding the digital ruble as well, along with some insightful data concerning crypto investments and BTC market capitalization. So, what are you waiting for? Let’s dive right into the 75th edition of Anchor’s Roundup!

ECB’s Christine Lagarde Calls for Tighter BTC Regulation

By sergio_pulp, Freepik

In an interview for Reuters Next conference, European Central Bank President Christine Lagarde has once again expressed her concerns regarding the potential abuse of bitcoin and called for a tighter global regulatory framework on this cryptocurrency. 

“Bitcoin is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity,” Lagarde explained. 

Now, while cryptocurrencies, due to their anonymous and decentralized nature, can be used for illicit activities, there is a little bit more to it than money laundering. Bitcoin and all cryptocurrencies that emerged after are a new, revolutionary occurrence that can’t simply be put in already-set frameworks. 

“There has to be regulation. This has to be applied and agreed upon … at a global level because if there is an escape, that escape will be used,” Lagarde said. Naturally, every sovereign country has its laws and they should be respected, but a lot of legislative efforts in the past focused on restriction and ban, instead of understanding and utilizing the industry and its nature. 

When something is completely unknown, it’s only logical to fear it and dislike it. Nevertheless, times change along with the means of payment consensus. What happens when, in a few years or decades, a vast majority of people start using cryptocurrencies for everyday activities? 

Individuals, organizations, and even entire countries have to learn to adapt to circumstances outside of their control. Not to ignore them, but certainly not to try to control them at any cost. And while you can like it or not, traditional fiat currencies’ monopoly is imperiled in the long run.

Russian Banks Concerned About Potential Digital Ruble Fraud

Oh my, banks truly are concerned these days. In October, the Russian central bank announced its plan of development for the digital ruble (Russian CBDC), and this week the Association of Russian Banks expressed its concerns about the usage of the currency. 

The ARB focused on the issue of cybersecurity, outlining the risks of hacks and unlawful seizures of assets. The digital ruble is meant to be used through e-wallets and mobile devices, both online and offline, and the ARB is especially concerned with the latter:

“Offline payments significantly reduce the possibility of detecting and preventing fraudulent payments, and this digital ruble model would be especially dangerous.”

While digital ruble may be vulnerable in this manner, these risks aren’t exclusive. The issues mentioned in the ARB’s feedback apply to any type of cashless transactions.  In any case, open discussion about the matter is a positive thing and it can result in the best possible version of a CBDC. 

Whatever your assets are, unfortunately, they can be taken, more or less. Cash, cars, jewelry – and the culprit can ensure anonymity in these cases as well. The point is, both your rubles and digital rubles can be stolen. However, ensuring the biggest possible security level is something the Russian central bank can further work on. 

BTC Has Only Taken 2% of Gold’s Market Cap for Now

By lcd2020, Freepik

The theory that the BTC price is being pushed by massive investor outflows from gold is busted. Some people are swapping gold for BTC, that’s for sure, but data suggest that bitcoin has taken only 2% of gold market capitalization. 

Chain analytics company CryptoQuant has proven that previous allegations that BTC ‘stole’ more than 7% of the total $10 trillion market cap of gold is false.

‘’People said $BTC took 7% of the Gold market cap. No, it’s not. There are unclaimed, unreachable, and lost Bitcoins. Based on the realized cap, it’s just 2%. If digital gold replaces 10% of the $XAU market cap then the $BTC price would be $154k,’’ said Ki Young Ju, CEO of CryptoQuant.

According to data from Buy Bitcoin Worldwide, Bitcoin has bought 18.6 ounces of gold for now. 

And if you thought the recent BTC rally would make the ‘haters’ quiet, well, you were wrong. Peter Schiff, a well-known BTC adversary, reflected on the recent events: “Bitcoin traded near $42K on Friday and near $30K on Monday. An asset that drops 28% over a weekend is not a safe-haven, a store of value, or a viable hedge against inflation.”

As Schiff continuously insists that gold is the best hedging mechanism, he didn’t miss the chance to comment: “If you want to gamble on #Bitcoin, buy Bitcoin. But if you want to hedge against inflation buy gold.”

US Financial Planners Are Keener on Investing in Crypto

Another interesting survey, conducted by Bitwise, shows that almost 10% of investment advisors in the US have made client portfolio allocations into crypto, which is a 50% growth compared to 2019.

The number of advisors allocating to crypto in client portfolios rose 49% in 2020, from 6.3% to 9.4%. 17% of advisors who do not currently allocate to crypto say they will either “definitely” or “probably” start an allocation in 2021, up from just 7% in 2020.

That interest in cryptocurrencies is vast shows the fact that 81% of all financial advisors reported receiving questions from clients regarding crypto in 2020. Additionally, and this is a very important moment, 25% of advisors in this year’s survey highlighted hedging against inflation as an attractive feature of crypto, up from just 9% last year. 

This increase in 177% shows that inflation is a big worry for American investors and, more importantly, shows that crypto is recognized as an effective hedging mechanism. 

2020 has definitely opened some doors for cryptocurrencies, as more people are looking to diversify their assets since having only fiat money is not the best long-term planning. 

Well, we couldn’t agree more, fiat currencies are susceptible to inflation and loss of purchasing power, and we aren’t talking just about Venezuelan bolivar, Brazilian real, Turkish lira, etc. The US dollar is also very vulnerable so it comes as no surprise that alternatives are being considered. 

Final Thoughts

Llegamos al fin del Crypto Roundup para la semana pasada! Yeah, your Spanish is very good – we are at the end of this week’s Roundup. What was your favorite part? 

Cryptocurrencies seem to bother banks more than usual, but as we’ve seen in the Bitwise survey, the interest in investing in crypto is growing. People recognize that cryptocurrencies offer what no other asset can – complete autonomy in choices and a fruitful alternative to the already existing financial system. Years to come will tell some interesting stories, I’m sure of it.

Be that as it may, you know where to find us every week and, until next time, I wish you fair winds and the following seas, my fellow Anchorians!

Disclaimer: The information provided in this post is not legal, accounting, or financial advice. I am not a lawyer, accountant, or financial advisor. I am not registered as an investment adviser with any federal or state regulatory agency. The Information should not be construed as investment or trading advice and is not meant to be a solicitation or recommendation to buy, sell, or hold any cryptocurrencies.