Fed Raises Rates Another 50 Basis Points, Signals More Hikes To Come Next Year -#40!

The cryptocurrency business is thriving, but a lot of things are happening, including Fed raising rates another 50 basis points, Microsoft banning Crypto mining on its online services, the Bank of England seeking a proof of concept wallet for CBDC, Tether eliminating collateralized loans in 2023 and much more!


In this issue:

  • Fed raises rates another 50 basis points, signaling more hikes to come next year.
  • PayPal works with the Crypto wallet MetaMask to offer an easy way to buy Crypto.
  • Microsoft bans Crypto mining on its online services without permission.
  • Bank of England seeks proof of concept wallet for CBDC.
  • CFTC declares Ether as a commodity again in a court filing.
  • Bitcoin Lightning Network to be used in fiat transfers between Europe and Africa.
  • Tether will eliminate collateralized loans in 2023.


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Fed raises rates another 50 basis points, signals more hikes to come next year

The Federal Reserve eased up on its most aggressive economic tightening campaign in three decades, raising interest rates by 50 basis points (after four consecutive three-quarter-point hikes) but leaving the door open for additional hikes next year as signs abound that the economy is slowing down enough to help cool the nation’s stubbornly high inflation.

Rate increases aim to slow inflation, but they also boost the cost of borrowing. In the last year, interest rates have jumped by about 3% for credit cards, and have nearly doubled for auto financing and adjustable-rate loans and mortgages.

The smaller hike reflects the Fed’s belief “that inflation will continue to moderate,” says Greg McBride, chief analyst at Bankrate. However, with the year-over-year inflation rate still above 7%, “we also have to check our expectations at the door” regarding rating increases.



PayPal works with the Crypto wallet MetaMask to offer an easy way to buy Crypto

PayPal will integrate its buy, sell and hold crypto services with MetaMask Wallet as the companies look to broaden users’ options to transfer digital assets from their platforms, the companies said Wednesday.

According to a press release, the partnership between the payments firm and MetaMask developer ConsenSys is intended to enable users to select their PayPal accounts as a payment option to buy ether (ETH) from within the MetaMask app. The offering is designed to facilitate seamless purchases and transfers of ether from PayPal to MetaMask.

MetaMask intends the offering to help bring more users into the Web3 ecosystem at a time when the sector is looking for a way forward during the crypto winter. “This integration with PayPal will allow our U.S. users to not just buy crypto seamlessly through MetaMask, but also to easily explore the Web3 ecosystem,” said ConsenSys product manager Lorenzo Santos in the press release. Select U.S. customers can access the new offering beginning today as PayPal works to roll out the service to the rest of its U.S. customers over the next few weeks.

The launch follows PayPal’s push to enable crypto transfers between its platform and several popular crypto exchanges in June. The fintech company debuted its crypto purchase, sell and hold service in October 2020.



Microsoft bans Crypto mining on its online services without permission

Microsoft updated the Universal License Terms for Online Services that came into effect on December 1. Cryptomining through online services has been banned by Microsoft. It is done to protect its clouds and customers. Earlier this month, the tech giant announced the new changes. Other than the Summary of Changes page no further information regarding the same was published.

On the official website of Microsoft, it is mentioned that it “Updates Acceptable Use Policy to clarify that mining cryptocurrency is prohibited without prior Microsoft approval.” The user must have written pre-approval from the company regarding the use of crypto mining via Microsoft Online Services regardless of the term of a subscription, as mentioned in the Acceptable Use Policy.

Microsoft informed that this change was made as “cryptocurrency mining can cause disruption or even impairment to Online Services and its users and can often be linked to cyber fraud and abuse attacks such as unauthorized access to and use of customer resources. We made this change to further protect our customers and mitigate the risk of disrupting or impairing services in the Microsoft Cloud.” It was also mentioned that crypto mining permission “may be considered for Testing and Research for security detections.”



Bank of England seeks proof of concept wallet for CBDC

Proof-of-concept for a wallet that may store a Central Bank Digital Currency CBDC is being sought by the Bank of England (BOE). The Bank of England advertised a call for proposals on the Digital Marketplace. A platform for government agencies to offer digital project work, on the 9th of December.

The requirements for the proof-of-concept wallet were rather straightforward. With just the most fundamental features such as a registration procedure, a mechanism to change data, and the display of balances and transactions deemed necessary.

The wallet must also prove it can be loaded and emptied with a CBDC. Moreover, make requests for P2P payments using an account ID or QR code, and be used to make purchases online.

Project deliverables include an iOS and Android app. Also, a wallet website, a merchant website, and the back-end infrastructure are needed to service the wallet website and applications and store user data and transaction history.

The Bank of England (BOE) wants to “sharpen functional requirements for both the Bank and private sector.” And make the CBDC product “more tangible for internal and external stakeholders.” Hence the stated goal of this project is to “explore the end-to-end user journey.”



CFTC declares Ether as a commodity again in a court filing

The Commodity Futures Trading Commission (CFTC) has again labeled Ether (ETH) as a commodity in a Dec. 13 court filing in contrast to statements from chief Rostin Behnam on Nov. 30 suggesting that Bitcoin was the sole cryptocurrency that should be viewed as a commodity.

In its lawsuit against Sam Bankman-Fried, FTX, and sister company Alameda Research, the regulator on multiple occasions referred to Ether, Bitcoin (BTC), and Tether (USDT) “among others” as “commodities” under United States law. “Certain digital assets are “commodities,” including bitcoin (BTC), ether (ETH), tether (USDT) and others, as defined under Section 1a(9) of the Act, 7 U.S.C. § 1a(9).” However, there appears to be some disagreement within the CFTC itself regarding whether Ether should be viewed as a commodity or not, at least in recent weeks.

During a crypto event at Princeton University on Nov. 30, CFTC chief Rostin Benham reportedly suggested that Bitcoin is the only crypto asset that should be viewed as a commodity walking back previous comments which asserted that Ether may also be a commodity. The chairman of the Securities and Exchange Commission, Gary Gensler has also had an undetermined stance on Ether in recent months.

In an interview with Jim Cramer during the hosts’ Mad Money show on Jun. 27, Gensler confirmed that Bitcoin was a commodity adding: “That’s the only one I’m going to say.” Gensler has previously suggested Ether was a security after its initial coin offering but had become more decentralized and turned into a commodity since then.

In September, his stance appeared to have shifted again after Ether transitioned to proof-of-stake (PoS) when he argued that staked tokens may constitute securities under the Howey test. The designation of crypto assets in the U.S. is particularly important, as the CFTC regulates commodities futures while securities like bonds and stocks are regulated by the Securities and Exchange Commission (SEC).



Bitcoin Lightning Network to be used in fiat transfers between Europe and Africa

The industry is still working to promote accessibility and global adoption despite the current crypto winter and users from different continents now have a way to conduct cross-border transactions involving multiple fiat currencies thanks to a new partnership between CoinCorner and Bitnob.

Typically, a third-party facilitator, like Western Union, which relies on centralized entities, is needed to transfer money between Europe and Africa. These transactions are known for their expensive cuts and frequently require approval from several parties before processing can begin. According to World Bank estimates, Sub-Saharan Africa received upwards of $40 billion in remittances annually as of 2020, with Nigeria alone receiving close to half of that total.

Through the Lightning Network, the money is automatically converted into BTC, converted to local currency in an instant, and then directly deposited into the recipient’s bank account or mobile wallet.

The Nigerian government met with Binance in September to discuss the possibility of negotiating a special economic zone designed to support blockchain and cryptocurrency businesses in the area, Cointelegraph further noted. Later research from Chainalysis emphasized Ghana’s ascent to prominence in the cryptocurrency industry. According to the report, Kenya and Nigeria could be overtaken by the nation in terms of the adoption of cryptocurrencies.



Tether will eliminate collateralized loans in 2023

Tether, the world’s largest stablecoin issuer, has pledged that it’ll stop lending out funds from its reserves in an attempt to restore faith in the crypto market amidst the ongoing FUD in the crypto community.

On 13 December, Tether addressed the ongoing FUD (fear, uncertainty, and doubt) regarding its secured loans, reiterating that its secured loans are over-collateralized and are covered by extremely liquid assets. It added that Tether would stop the loans throughout 2023.

Tether explained that its secured loans work similarly to how private banks lend money using secured collateral. It added that its loans are fully backed up by more than 100 percent, unlike private banks that work on fractional reserves.

This comes after a WSJ report that deemed these loans risky, claiming that the “company may not have enough liquid assets to pay redemptions in a crisis.” The WSJ had previously claimed that Tether could become technically insolvent if its assets fell by merely 0.3 percent. Tether refuted the claim stating that the company had increased the transparency and legitimacy of its attestations by hiring a top-5 accounting firm.

The attestations claimed that Tether had 82 percent of its reserves in extremely liquid assets. Tether had removed the commercial paper from its reserves and replaced it with U.S. Treasury Bills in October in response to media FUD.





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