22.03.202118:11 Forex Analysis & Reviews: When will the world see the new digital dollar Fedcoin? Nigeria and India's cryptocurrency ban

Wall Street is not thrilled that the financial services industry is preparing for the biggest shock in a decade. Investors and traders are watching closely as the US Federal Reserve is working on a new digital currency. The new digital dollar, which has already been dubbed - Fedcoin, will create a lot of problems for the entire banking system of the country, as well as for companies involved in financial services, for example, issuing credit cards. Operators of digital payment systems, nervously watching the Fed's efforts to create an electronic alternative to paper dollars, will not be left without shocks.

Fedcoin

It is expected that in July this year, representatives of the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology, who are developing a platform for the digital dollar, will publish their research on this subject and the first results of their work. This was announced by James Cunha, who heads this project at the Boston Fed. Feeling a serious threat to future profits, a leading group of Wall Street banks has already approached the US Congress with a statement that they do not need a digital dollar. When some begin to panic gradually, trying to "put a spoke in the wheel", others act ahead of the curve. These are payment companies such as Visa Inc. and Mastercard Inc., which have long been involved in introducing digital payments related to cryptocurrencies and blockchain into their systems. Also, Visa Inc. and Mastercard Inc are trying to get the central bank to use the new digital currency in their systems. Financial giants are pressuring that a completely new platform and form of payment could interfere with the work of the entire current system. Although, in truth, most likely they are shaking only for their material gain, as it always was.

There is not much hype on this issue, as lawmakers, US Treasury officials, and the Federal Reserve have not yet approved the introduction of the US digital currency. Even after the final development of the platform and its successful test mode, it can take years to carry out all the work at the legislative level. Several issues should also be resolved: how the digital dollar will interact with the existing global payment network and how it will be introduced into it, what it will be tied to and what will be provided, etc.

If you quickly go over the digital currencies of other countries, then there is no special breakthrough in this direction yet. It was only in 2020 that the Bahamas launched a digital currency called the "sand dollar", but it is more of a "dollar" for a narrow circle of people. Brazil, which has been working on digitizing its real for a long time, plans to launch it in 2022. The Canadian authorities are still working on developing the infrastructure needed for the digital currency, but there are no plans to launch it yet.

Meanwhile, China is preparing to launch a pilot digital yuan only in 2022, while Japan is only planning to work on a digital currency. In the eurozone, they are only studying a potential "digital euro" to decide on its development in the future. And Russia is expected to have a pilot launch of the digital ruble this year.

Bans on cryptocurrencies in Nigeria and India

Now let's talk a little about the bans on cryptocurrency from Nigeria and India. Nigeria's central bank today issued a clarification to a statement released last month. It states that all financial institutions in the country must close all accounts related to cryptocurrency trading. On Sunday, a representative of the central bank said that the order should not be taken for a total ban. Instead, the bank will stick to the 2017 ban on cryptocurrency transactions, and nothing more. Central Bank of Nigeria deputy governor Adamu Lamtek also noted that the bank has never banned cryptocurrency activities in the country. "CBN has not imposed restrictions on the use of cryptocurrencies, and we are not discouraging people from trading them," Lamtek said.

As for India, the situation is rather delicate: the government says one thing, but acts quite another, so investors in India's digital assets are faced with even greater uncertainty amid new reports that the possibility of blocking the IP addresses of exchanges and companies trading cryptocurrencies is being considered. Although last week, statements were made that no one is going to achieve a complete national blocking of cryptocurrencies. Rumors about the possible entry into force of a ban on cryptocurrencies and mining up to criminal liability are not a joke. Recent statements by the authorities that the ban is not planned did not reassure investors, as changes in the regulatory framework do raise concerns and risks. Most recently, Minister of Finance Nirmala Sitharaman said: "On our part, we make it very clear that we are not closing all the possibilities for the use of cryptocurrencies. We will enable people to experiment with blockchain, bitcoin, or cryptocurrency, but within certain limits." Investors hope that the Indian authorities will not prohibit the use of cryptocurrencies, given the investment potential this direction carries.

Back in February, Indian cryptocurrency exchanges launched the #IndiaWantsBitcoin campaign, an initiative designed to convince parliament to regulate cryptocurrencies rather than impose a complete ban. Let me remind you that the Indian government plans to submit to the current session of parliament the consideration of a bill banning "private cryptocurrencies", although its test and scope remain a mystery to most.

As for the technical picture of bitcoin, much depends on the behavior of investors at the level of $59,200. Its breakout will provoke a new large wave of growth with a return to the level of $60,000 and the subsequent renewal of historical highs around $62,000 and $65,000. It will be possible to talk about a downward correction in bitcoin only after the trading instrument drops below $54,400, which will lead to a rapid collapse in the area of $49,600 and $44,900.