Headlines

▌ UK Law Commission sees Cryptocurrency as a New Type of Property

The U.K. Law Commission wants to extend the country’s property rules to cover cryptocurrencies and non-fungible tokens (NFT), according to a consultation paper published on Thursday. In addition to legally defining digital assets as personal property, the proposed reforms could make it easier for crypto investors to claim losses in hacks or scams through legal action. Part of the purpose of the seemingly crypto-friendly proposal is to help the government achieve its goal of turning the country into a global crypto hub, the committee said in a statement. To accommodate digital assets, the Law Commission proposes to create a new category called "data objects" that would account for things composed of data in an electronic form such as databases, software, digital records, domain names, and crypto.

Policies

▌Russia is preparing to pass legislative amendments to regulate NFTs

Russia’s Moscow Ministry of Economic Development is planning to propose several amendments to the Civil Code and the Law on “Digital Financial Assets” to regulate the NFT market in the Russian Federation. The news comes from a meeting of a task force held on the initiative of the ministry. During the discussion, participants provided legal definitions for crypto collectibles and drafted necessary legislative changes. The meeting was attended by representatives of the Central Bank of Russia (CBR) and Russian social media network Vkontakte, which earlier this year announced its intention to introduce support for blockchain and NFTs on its platform.

Cryptocurrency

▌IMF warns crypto markets could get worse

Tobias Adrian, Director of Monetary and Capital Markets for the International Monetary Fund (IMF), issued a warning in a recent interview that the crypto markets could get worse. Adrian believes that more cryptocurrency projects may fail in the future. It is worth noting that the current cryptocurrency crisis was largely triggered by the downfall of TerraUSD (UST), the infamous algorithmic stablecoin, causing the entire crypto ecosystem collapsed. In near future, those vulnerable fiat-backed stablecoins could also trigger a bank run. He specifically cited Tether, one of the stablecoin issuers, as an example of such.

▌South Korea probes unusual US$3.4 billion cryptocurrency-linked foreign exchange transactions

South Korea’s Financial Supervisory Service (FSS) is investigating unusual foreign exchange transactions worth $3.4 billion at two of the country’s largest commercial banks to determine whether they are linked to illegal cryptocurrency activities. The FSS said in a statement that five branches of Woori Bank experienced irregularities, totalling 1.6 trillion won between May 3, 2021 and June 9, 2022. Besides, 11 branches of Shinhan Bank saw a similar transaction worth 2.5 trillion won between February 23, 2021 and July 4, 2022. The FSS has asked all banks in the country to conduct an internal review of all large overseas transactions in 2021 and the first half of 2022, as well as any suspicious transactions related to cryptocurrencies. The banks will need to submit a report by the end of July.

Key Economic Events

▌The Fed raised interest rates by 75 basis points to 2.25%-2.50% range

The Federal Reserve raised its benchmark interest rate Wednesday by 75 basis points to 2.25%-2.50% range, marking two consecutive interest rate hikes of 75 basis points. In the post-meeting statement, the Federal Open Market Committee (FOMC) is highly concerned about inflation risks. The unwinding of the Fed’s balance sheet will be accelerated in September as planned. For agency debt and agency mortgage-backed securities (MBS), the cap will increase to $35 billion per month. For Treasury securities, the cap will increase to $60 billion per month.

▌Powell: Another big rate hike likely, but will be data-driven

On July 28, Fed Chairman Jerome Powell said at the Fed rate meeting: I don’t think we have to go through a recession. The chances of a soft landing have narrowed significantly. Restoring price stability and lowering inflation are both things we have to do, and we don't see that as a trade-off. Doing too little before, increased the cost of dealing with problems thereafter. I don't think the U.S. is currently in a recession. Overall, the GDP figures do tend to be significantly revised. We'll be watching all the data ahead of the September meeting to see where policy needs to develop toward. No specific guidance will be provided for the September meeting. Another big rate hike is likely, but it will be data-driven and no decision has been made on when to slow rate hikes.