What Is Happening in Crypto? Three Market News In Focus
The last week has been quite eventful in crypto. In case you have been absent from the news portals or feel overwhelmed with all the information coming your way – we’re here to help! We took three latest crypto market news into focus and reviewed them. Keep reading to learn what’s happening in the market!
Coronavirus Is Shaking Up Financial Markets
The continued spread of COVID-19 is having a significant effect on finance. Traditional markets recovered from the initial scare after China’s prompt intervention made it seem like a global pandemic can be avoided. However, the equities markets dropped again on February 24 over the news of the virus spreading into Italy.
The stocks of US-based companies are trembling, since their manufacturing is highly dependent on China. The outbreak of the virus affects the supply chains and causes business to slow down globally. Although the U.S. stocks plunged by a record amount in the last six months, the effect on crypto has been more modest.
Bitcoin dropped by 2.82% on February 24, followed by 3.57% on February 25. When considering Bitcoin’s historical volatility, this drop is not nearly as severe as in the traditional markets. Although Bitcoin’s price rallied in 2020, it has already seen six other instances where the daily loss has been 3 percent or greater.
“There’s certainly a bit of fear in the bitcoin market, but it’s not anything close to the panic we’re seeing on Wall Street today, with the clear flight to safety,” commented Mati Greenspan, founder of the analysis firm Quantum Economics.
Bank of Canada is Exploring Opportunities
Although the Central Bank of Canada has currently no plans to issue its own digital currency, they are keeping their eyes open. They have been one of the most attentive parties in the CBDC (Central Bank Digital Currency) concept, as they ran a pilot on R3’s DLT solution Corda and a live-test in a cross-border settlement trial with the Monetary Authority of Singapore.
Deputy Governor Timothy Lane states that they don’t see a convincing reason to issue a CBDC at present, however, the spread of private cryptocurrency use could change that. Lane also comments on Libra and says that although it’s unknown whether Libra will ever come into existence, it is a good example of a transformative technology that affects how the bank needs to respond to the future of money.
What’s next on the agenda for Canada? They plan to do more research and consult with central banks in the U.K, Sweden, Switzerland, Japan, the EU and the Bank of International Settlements. They will also consult with key stakeholders in the government and provinces across Canada to see if CBDC is something they are aiming for and how to design it.
South Korea on Crypto Taxation
Business Korea report states that tax experts have recommended the Korean government to apply a low tax on cryptocurrency profits before subjecting citizens to a transfer income tax. The planned launch for the tax reform is late 2020.
The report specifies that low-level trading tax should be favored over transfer tax since there is a lack of legal infrastructure for enacting the latter. The Korean Blockchain Association seems to be on board with the proposal. They note that related laws are still missing to cover cryptocurrency taxation as a whole. They also focused on the need to define crypto acquisition costs before imposing a transfer tax could be possible.
Cryptocurrency taxation seems to be inevitable in South Korea. Their ministry of Economy and Finance stated in January that they are considering imposing a 20% income tax on crypto transactions.