Sit on the fence
Immediately after Russia’s invasion began, Ukraine’s Deputy Prime Minister Mykhailo Fedorov has been on both sides of a new global division over the digital currencies exposed by the war.
On February 26th he Release His much more attention-grabbing campaign for Bitcoin, Tether, and Ethereum donations to direct money to resistance triggers faster than traditional appeals against international donor cash may have been made. This reportedly brought about US $ 100 million.But two days later, the politician was in charge of digitizing his country. I was asked By requiring all major crypto exchanges to block the addresses of Russian users, it has extended the then modest economic sanctions into the new world of cryptocurrencies.
The Ukrainian War was a turning point for embodying good and bad DeFi.
“It’s important to freeze not only to addresses linked to Russian and Belarusian politicians, but also to thwart the general public,” Fedrov insisted in a tweet, but his call for donations was less loved. I didn’t. “If the goal is to pressure citizens to rebel against the government, revoking access to their capital will weaken their ability.” Typical Responses from libertarian crypto crowds.
The debate about regulating “money of freedom” is certainly not over this Demonstration of a typical Twitter user:
The natsec and neocon types will not like the fact that sanctions are dull and are approaching obsolete as a tool, but financial sovereignty at the state and individual levels and “everyone is controlled by a single government. If I choose to use the money database, I know where I stand.
But just a month after Fedrov unveiled a new gap in the purpose of decentralized finance (DeFi) in the changing geopolitical world, one of the biggest developments in the world’s money markets over the decades. Seems to be steadily drawn into the security order of the new world.
When this year begins, we face a difficult time here for cryptocurrencies after soaring prices from both the multilateral financial institutions trying to catch up last year and investors under pressure to rise interest rates. I noticed that I was doing it.
But the Ukrainian War is broadly in line with the spirit of crackdown on Russia, admitting the more institutional end of the DeFi revolution, if not Twitter’s libertarians, at least with the admiration of US-led sanctions. ..
Cryptocurrency exchanges such as Binance have developed procedures to “know customers” with the aim of becoming part of mainstream finance as a listed regulated company, rather than the chaotic mess that runs the Internet’s Nether Corner. , This was probably unavoidable.
Nonetheless, the United States immediately warned about the consequences of the more established end of the DeFi system, as there were signs that Russians were still using cryptography to withdraw money from the country. For example, a new Department of Justice (DoJ) official declared, “The KleptoCapture Task Force has declared:
Financial institutions, banks, remittance services and cryptocurrency exchanges are deliberately unable to maintain proper money laundering prevention policies and procedures, allowing these oligarchs to move their money. .. .. It will be the crosshairs of this survey.
Due to the expanded sanctions, the Group of Seven emphasized the new DoJ mindset, but is relatively positive in the DeFi world against President Joe Biden’s March 9 presidential directive on US digital currencies. The reaction seemed to reflect the Zeitgeist after the invasion. shift.
Government-issued digital fiat currencies can be seen as an attempt to strangle and kill the DeFi libertarian threat. This is almost the same as in China’s advanced digital yuan. Or you can think of it as trying to lay out some load rules that strongly support certain types of crypto innovation, such as Stablecoin.
While Biden’s order called for more work on the national security aspect of cryptography, the founding DeFi was founded by the G7 government in other countries under the authority of the G7 government to expand its supply chain, strategic commodities and national security. Foreign reserves, and even fraudulent big yachts.
Therefore, in contrast to the more Anodyne’s discussion paper on digital currencies by the U.S. Federal Preparatory Committee in January, Biden’s relatively swift response is a financial superpower behind the U.S.’s well-coordinated Ukrainian sanctions campaign. It can be seen as reasserting the status of.
Digital down below
Comments by Senator Andrew Bragg, a key ideological leader of the Australian Parliament on digital assets this week, tend to emphasize the idea that the Ukrainian War is a turning point for embodying good and bad DeFi. I have.
Bragg reportedly said at the Australian Blockchain Week meeting that “we don’t live in libertarian nirvana,” but Australia was reportedly in the direction of the tentative regulations outlined by the Morrison government on Monday. I had the opportunity to become a crypto hub.
And he is concerned that the government will use crypto as a “loophole” in Russian sanctions and will not provide financial reporting agency AUSTRAC with a “back door” to support Russia’s interests in digital currencies. He said he requested to report on the exchange.
Like Biden’s orders, these domestic regulatory proposals were in the pipeline before the Ukrainian War, but DeFi seems to have given new momentum to keep Russia’s economic sanctions from undermining. In fact, Singapore, after Biden ordered to impose new rules on digital assets, was completely incompatible with libertarian vision, but at the same time promised to remain open to new financial technologies. Nonetheless, the ability of the newly revived Western Alliance to stare at the challenges DeFi poses to Bretton Woods’ geoeconomic order is what these newly proposed domestic regimes are for FinTech’s digital innovation. It still depends on how you respond.
Despite Bragg’s confidence, everything is in control, but this is Australian Financial Review According to the commentary, domestic regulators are still struggling to manage the International Monetary Fund, Western governments, and alternative financial systems that threaten the US dollar’s position as a global reserve currency.
Bitcoin bond bomb
In January, when we wondered if unattractive investors or newly assertive global regulators brought the most important new challenges to cryptocurrencies, El Salvador was a planned US $ 1 billion government bit. I was sticking my nose into the IMF with coin government bonds.
Given that developing countries such as El Salvador are often dissatisfied with the restrictions imposed by the Bretton Woods system, the success or failure of this first attempt at new forms of financing through cryptocurrencies is a major problem. It may have been. With El Salvador postponing bond issuance on Wednesday, it’s hard to tell if it’s taking the IMF threat seriously or if it’s suffering from Bitcoin’s decline and volatility since its record value in November last year. It’s a little difficult.
Nonetheless, Wednesday’s interim report from four central banks on the use of digital currencies to make cross-border transactions cheaper is the development that the current payment system relies on foreign workers’ remittances. It just emphasized how to hurt developing countries.
Backed by the Reserve Bank of Australia, the report states that government cooperation between digital currencies makes cross-border payments faster and cheaper by reducing reliance on intermediaries and simplifying the payment process. , Explains in detail how to make it safer. This is probably more about dodging crypto alternatives for some guest workers from developing countries than making the global labor market more equitable. However, it could help offset the ways in which growing security concerns about supply chains are expected to curb global trade growth and undermine global growth.
Credit Suisse strategist Zoltan Pozar witnesses the birth of Bretton Woods 3 and tensions about where the crossroads of media-focused sanctions and DeFi leave the global financial system Tells a lot about. Due to the Ukrainian War, the financial system designed in Bretton Woods in the United States in 1944 will shift from “internal funds” created by the government and central banks to “external funds” built around commodities and gold. I will be forced to do so.
“If you believe that the West can take sanctions to maximize Russia’s pain and minimize Western financial and price stability risks, then Unicorns can also believe … After the war,” “Money” will never be the same again, “argues a former US financial official.
Western nations have just reaffirmed their institutional power, but countries with more vague sanctions on Russia, such as India, Indonesia and Vietnam, are still becoming a growing part of the world economy.
He states that after Russia’s foreign exchange reserves freeze, more countries like China will diversify their reserves from Western currencies to assets such as commodities beyond government control. And this will, importantly, diversify financial risk as well as security risk. And Bitcoin will probably benefit.
This is a new version of the old debate about the diminishing dominance of the US dollar as the world’s reserve currency. This seems counterintuitive when we have long looked at the most important indications of US institutional economic power. For example, almost half of the SWIFT payments are settled in dollars, even though the United States accounts for only about 10% of world trade.
But while Western nations have just reasserted their institutional power, more vague countries about Russia’s sanctions, including India, Indonesia and Vietnam, are still becoming a growing part of the world economy. They may be interested in investigating at least some alternative reserves and trade settlement currencies.
This is a complicated situation for Australia. More commodities of reserves will benefit the mining industry. But more regional trade settlements in RMB may be a bit more unpleasant.