CoinLoan Weekly: Price dynamics, El Salvador citizenship for investors, XRP is not a security
After three positive days and a peak of $44,574.32, Bitcoin plunged on Thursday, February 17. It then fluctuated around $41,000 before dipping further. By 6 pm on Monday, February 21, BTC bottomed out from its 7-day low of $37,557.60.
Both crypto and stock investors have reduced their exposure to risk in light of geopolitical uncertainty. An open conflict between Russia and Ukraine could have an adverse effect on the Bitcoin hashrates, which would result in significant market turbulence. The Fear & Greed index has nosedived to 25, indicating extreme fear.
As of now, BTC is trading at $38,816.11, with a 24-hour uptick of +1.1%. Over the past week, it has lost -8.1%.
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Like Bitcoin, Ethereum peaked on Wednesday, February 16, reaching $3,179.30. This hike was followed by a 4-day plunge. In the early hours on Monday, February 21, the price fell to $2,599.04 and reversed.
The ETH’s dynamics over the weekend were more negative compared to Bitcoin. Nevertheless, the token has lost slightly less in total.
As of this writing, ETH is trading at $2,730.99, with a 24-hour increase of +3.0% and a 7-day change of -5.5%.
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Ripple mirrored Bitcoin’s movements in the first half of the week. It reached its 7-day high of $0.852479 on Wednesday, February 16, and subsequently plummeted. On Saturday, February 19, the token shot up to $0.835305, nearly regaining the preceding losses.
Since Sunday, February 20, the price has been falling again. The latest upturn was caused by the release of new documents as part of the SEC v. Ripple Labs, Inc. litigation.
As of now, XRP has reached $0.782087, losing -0.6% over the past 24 hours and -3.7% over the past seven days.
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President of El Salvador plans to offer citizenship to foreign investors
Salvadoran President Nayib Bukele is determined to make his country one of the most welcoming Bitcoin-friendly locations. He has proposed 52 legal reforms to reduce red tape and create tax incentives. According to Bukele's plan, foreign investors who support the national economy will be offered citizenship.
On Sunday, February 20, the president tweeted that he was sending the reforms to Congress. “The plan is simple: as the world falls into tyranny, we’ll create a haven for freedom,” he wrote.
Bukele’s stance on Bitcoin has made him a controversial figure in global politics. Last September, Bitcoin became legal tender in El Salvador alongside the US dollar. This prompted US senators to introduce the Accountability for Cryptocurrency in El Salvador (ACES) Act. It is designed to mitigate the consequences of the adoption as it “opens the door for money laundering cartels and undermines U.S. interests”.
In his tweets, Bukele has referred to the senators as “boomers” and reminded them about El Salvador’s sovereignty. In March 2022, the country is going to launch the Bitcoin Volcanic bonds. The money raised from the sales will be used to build the first Bitcoin city in the world.
Contrary to multiple warnings from the World Bank and the International Monetary Fund, using BTC as a legal tender has not undermined the country’s economy. In 2021, its GDP showed double-digit growth for the first time in history, rising by 10.3%. In January, the government reported a 13% annual increase in exports.
In 2012, lawyers told Ripple XRP was not a security
According to memos published on February 18, Perkins Coie's lawyers concluded that XRP was not a security in their consultations for Ripple in 2012. However, they also acknowledged that the SEC might disagree if the token was released under an ICO-like procedure. These documents also suggested steps to minimize this risk.
The unsealing of the memos caused a 10% surge in the XRP price. The ongoing lawsuit has heated up. The upcoming ruling by judge Sarah Netburn will be the biggest decision in the case, according to John Deaton, founder of Deaton Law Firm and CryptoLaw.
In 2012, the lawyers defined Ripple as a Money Service Business (MSB). In 2015, following the signing of a binding agreement with the US government, Ripple was classified as a “convertible virtual currency”.
In 2018, the SEC lawyers released a legal memo analyzing whether the token was a security under the Howey test — a US Supreme Court procedure for identifying investment contracts. They concluded that enforcement action was inadvisable. Since then, the currency has been in legal limbo. The SEC filed the current lawsuit in 2020.