🪙The Crypto Alliance of Russia, Iran & BRICS+,☠Crypto Declared a National Security Threat in Nigeria,📉Hong Kong's ETF Stumbles

May 04, 2024

Your 5 minute emerging markets web3 weekly update

In This Issue

Eastern Europe
🔸Russia's and Iran's Crypto Collaboration to Evade US Sanctions, A Potential Framework for Future BRICS+ Trade
🔸A Common BRICS Digital Currency Stalls, but Alternatives Remain on the Table to Challenge the Dollar

Africa
🔸Nigeria Declares Crypto a National Security Threat, P2P Trading Faces Ban
🔸From Johannesburg to Warsaw: VALR's Strategic Leap Towards Becoming a Global Crypto Leader

Asia
🔸The Tortoise and the Hare? A Slow Start for Hong Kong's Bitcoin and Ether ETFs
🔸Researchers at the American University of Sharjah Unveil Groundbreaking Blockchain System to Improve Carbon Credit Trading

Latin America and the Caribbean
🔸Colombian Financial Giant Launches Bermuda-Based Crypto Trading Subsidiary, Plans to Expand Globally
🔸Brazilian Cryptobank Aims to Mirror Brazil's Pix Success with Lightning Network Payments

Catch up on the latest episodes and clips from the third season of the EmergingVoices Podcast on YouTube!

Eastern Europe

Image Credit: Dall-E 3

Russia and Iran are deepening their digital finance collaboration, focusing on integrating digital financial assets and central bank digital currencies to streamline trade and potentially circumvent Western sanctions, as highlighted by Rahimi Mohsen, trade attaché of the Iranian Embassy in Russia. This partnership includes linking their national payment systems and exploring the creation of a stablecoin, which may lay the groundwork for broader financial cooperation among BRICS+ countries. Additionally, both countries are preparing infrastructure and regulatory frameworks necessary for these new payment methods, aiming to streamline international trade and reduce the impact of US sanctions.

Last week, Russia's Deputy Foreign Minister Sergei Ryabkov discussed the prospect of a common BRICS digital currency, indicating that it is not an immediate priority but suggesting that some form of monetary collaboration could be possible within a year. After this year’s February BRICS meetings, Russia highlighted the BRICS Bridge platform for international payments and settlement but did not specify its use of digital currencies. Additionally, BRICS members China and the UAE have been actively involved in the mBridge initiative, a cross border central bank digital currency (CBDC) project. Now that BRICS has expanded from five to ten members and chaired by Russia, the group is exploring varied approaches to enhance monetary cooperation to challenge the US dollar's supremacy as the preferred currency for cross-border trade.

Africa

Image Credit: Dall-E 3

Cryptocurrency trading is now classified as a national security issue in Nigeria, leading to a likely ban on peer-to-peer (P2P) trading. In response, at least three Nigerian fintech startups—Moniepoint, Paga, and Palmpay—will start blocking and reporting crypto transactions to law enforcement. This marks a significant policy shift from the Bola Tinubu administration, which had previously eased restrictions and engaged with crypto exchanges for licensing. Amidst Central Bank accusations of P2P crypto traders manipulating the foreign exchange value of the naira, a severe crackdown has resulted in the freezing of over 1,000 bank accounts linked to alleged illicit activities.

VALR, South Africa's largest cryptocurrency exchange, is expanding its services internationally, starting with Poland and planning additional expansions into Dubai and Mauritius, according to CEO Farzam Ehsani. Recently authorized by South Africa's Financial Sector Conduct Authority to operate as a crypto asset service provider, VALR serves over 600,000 retail and 1,000 institutional clients globally, and is focusing on increasing its non-South African client base, which currently constitutes 25% of its total customers. Despite regulatory challenges in markets like Nigeria, VALR is seeking licenses in regions with clear regulatory frameworks and aims to compete globally by enhancing its product offerings, including potentially offering insurance for crypto assets.

Asia

Image Credit: Chainalysis

After so much hype, Asia's first bitcoin and ether exchange-traded funds (ETFs) began trading in Hong Kong on Tuesday and only had US$11.1 million in trading volume by the close of trading. In stark contrast, the 11 bitcoin ETFs in the US that debuted in January saw more than US$4.6 billion traded on their first day. Market makers likely drove most of the first-day trading, and with ongoing demand still uncertain, fund managers and brokerages are dangling incentives like waived fees to attract investors in a market considerably smaller than the US.

A research team at the American University of Sharjah has developed a blockchain system aimed at improving the carbon credits trading market. Aligning with the United Nations' mission to combat climate change, this blockchain solution automates key processes including participant registration, credit generation, tracking, and trading, promising increased transparency and credibility in emissions-related transactions. Dr. Malick Ndiaye, the lead researcher, emphasizes the transformative potential of the system, citing advantages such as cost reduction, processing time optimization, and risk mitigation, while envisioning broader societal benefits such as curbing air pollution and fostering economic growth.

Latin America and the Caribbean

Image Credit: Dall-E 3

Bancolombia Financial Group has launched Wenia, a new Bermuda-based subsidiary platform that enables clients in Colombia to trade, convert, and manage cryptocurrencies such as bitcoin, ether, and other digital assets like MATIC, USDC, and its native COPW. Currently limited to Colombia, Bancolombia plans to expand these services to other regions, following trends set by other Latin American banks like Brazil's Nubank, and expects to onboard over 60,000 clients in its first year. Although part of the Bancolombia Group, Wenia operates independently under a Class F license from the Bermuda Monetary Authority, protecting the parent company from the risks associated with digital assets.

Brazilian cryptobank, Bitybank, has introduced Lightning Network payments. This move follows Bitybank's merger with Biscoint, which had already integrated with the Lightning Network. Bitybank aims to replicate the transformative effect of Brazil's Pix instant payment system on Bitcoin transactions in Brazil, emphasizing speed, low costs, and 24/7 availability in financial operations. Bitybank claimed the highest bitcoin trading volume in March among Brazilian exchanges, with R$2 billion transacted through its application and website.

Thanks for reading and have a great week ahead!

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Written by Jon Lira. Connect with him on LinkedIn.

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