2. Another one makes the move: Brazil legalizes crypto as payment method

The Facts:

• Brazil’s Chamber of Deputies passed a law earlier this week, legalizing the use of cryptocurrencies as payment method with final approval and signature from Brazil’s president still being required.
• The bill signed under the code PL 4401/2021 also includes the usage of airline miles in its definition of payment forms.
• The bill further comprised the separation of customer and company funds for exchanges.

Why it’s important:

• With roughly 40% of Brazilians owning crypto, the implications of the new laws being successfully passed will have a widespread impact on further crypto adoption.
• Brazil’s move comes amidst further crypto contagion within a year-long bear market, yielding a strong signal and force for enabling further crypto adoption.
• While not making crypto legal tender, the move will boost further adoption of crypto in South America, with Brazil being the largest economic force on the continent.
• Although not making cryptocurrencies or Bitcoin legal tender, the countries’ decision is a milestone in crypto adoption, enabling further innovation and giving its citizens alternative means of currency.
• Brazil’s decision to support crypto adoption and innovation is a strong signal of confidence for the industry, though it’s not as big of a move as El Salvador, which made it legal tender.
• Proper regulation such as the mandated separation of customer and corporate funds will significantly limit losses for customers in cases of bankruptcy.

3. Economic and macro update

The Facts:

• The past week has been filled with various leading macro indicators and numbers being released, alongside the FOMC meeting and J. Powell’s speech on Wednesday.
• Overall, inflation seems to have levelled slightly, with the latest U.S. inflation print coming in while policy makers hint at moderating interest rate hikes.
• The U.S. FOMC Dot Plot summarizing economic projections for the interest rate project a peak at around 5% in 2023, with the rates slowly decreasing by roughly 1% p.a. the years thereafter.
• The overall growing strength of the dollar, measured by the DXY US-Dollar Index, forced dollar debtor countries into austerity mode, as their debt servicing costs keep rising.
• The IMF estimates that roughly 60% of lower income countries are currently on the brink of or already in default.

Why it’s important:

• With the latest inflation print coming in somewhat more moderate, the end of the current economic turmoil seems near, while the hint of more dovish interest rate policies could promise recovery in markets overall.
• However, a deceleration of interest rate hikes brings along the potential for an increasing pace of inflation rates over the next periods if the slowdown of rising CPI cannot sufficiently be sustained.
• Historic experiences, such as the 70s period of extended inflation taught us that a premature turnaround in interest rate policy can be a mistake, causing another potential “lost decade”.
• Rising US interest rates might have caused a slowdown in inflation, nevertheless it has caused tremendous economic pain for U.S.-Dollar debtors worldwide.
• Especially low-income countries borrowing dollars to boost economic development are facing a retraction on education, infrastructure, and economic development spending, opposite to their borrowing intentions.
• The economic consequences and ramifications could cause a trickledown effect back to developed economies, causing the pace of rising inflation to pick up once more.

In other news

• Ankr Protocol hacked for $5.5 million (via TheDefiant)
• Total Adressable Market Model for Bitcoin’s Price (via CoinShares Research)
• Apple blocks Coinbase wallets for allowing NFT Sales ( via CoinTelegraph )
• Porsche enters Web3 with own NFT Collection (via Newsroom)
• Bitcoin sole commodity in wake of FTX collapse according to CFTC chief (via Cointelegraph)
• Third crypto executive to die in strange circumstances in the past month (via Coinmarketcap)