GDP in the EU is now forecast to reach 1.0% in 2023 and 1.7% in 2024, up from a previous forecast of 0.8% and 1.6%.
The European economy continues to show resilience in a challenging global context and is now expected to grow more than expected over the coming two years.
This is due to lower energy prices, abating supply constraints and a strong labour market that supported moderate growth in the first quarter of 2023, dispelling once and for all fears of a recession.
These were the main findings from the European Commission, which presented its Spring Forecast in Brussels on Monday.
This better-than-expected start to the year lifts the growth outlook for the EU economy to 1.0% in 2023 (up from 0.8% in the Winter Interim Forecast) and 1.7% in 2024 (1.6% in the winter), according to the data.
Upward revisions for the euro area are of a similar magnitude, with GDP growth now expected at 1.1% and 1.6% in 2023 and 2024 respectively.
Ireland is expected to post the highest growth of the bloc’s 27 member states with 5.5% this year and 5.0% in 2024. Sweden and Estonia are however seen contracting this year with GDPs of -0.5% and -0.4% respectively. For the Baltic country, 2023 should therefore be the second year in a row with negative growth but it is then forecast to rebound strongly and grow by 3.1% in 2024.
The bloc’s economic powerhouse, Germany, should meanwhile post anemic growth this year of just 0.2%, followed by 1.4% next year. France should fare a bit better this year — 0.7% — and double that the following year.
But it’s not all good news. On the back of persisting core price pressures, inflation has also been revised upwards compared to the winter, and is now forecast to reach 6.7% in 2023 and 3.1% in 2024 with lower forecast for the euro area.
Hungary will be the most impacted, with inflation seen reaching 16.4% this year, followed by Czechia and Poland with readings close to 12%.
Luxembourg, Belgium and Spain should have the lowest inflation readings — between 3% and 4% — this year.
“The EU economy is holding up remarkably well in the face of Russia’s aggression against Ukraine, leading to an upgrade in today’s growth forecast for 2023”, said Valdis Dombrovskis, Executive Commission Vice-President in a statement.
“With energy prices clearly down, governments should be able to phase out support measures and reduce their debt burdens.”
Markedly lower energy prices are working their way through the economy, reducing firms’ production costs. Consumers are also seeing their energy bills fall, although private consumption is set to remain subdued as wage growth lags inflation.
After peaking in 2022, headline inflation continued to decline in the first quarter of 2023 amid a sharp deceleration of energy prices. Core inflation (headline inflation excluding energy and unprocessed food) is, however, proving more persistent.
In March it reached a historic high of 7.6%, but it is projected to decline gradually over the forecast horizon as profit margins absorb higher wage pressures and financing conditions tighten.
“Inflation has proved stickier than expected but it is forecast to decline gradually over the remainder of 2023 and in 2024. And the improvement in public finances is set to continue as energy support measures are progressively withdrawn”, EU Economy Commissioner Paolo Gentiloni told reporters.
The Commission publishes two comprehensive forecasts (spring and autumn) and two interim forecasts (winter and summer) each year. The interim forecasts cover annual and quarterly GDP and inflation for the current and following year for all Member States, as well as EU and euro area aggregates.
The European Commission’s Summer 2023 Economic Forecast will update GDP and inflation projections and is expected to be presented in July 2023.
The next round of EU sanctions against Russia aims to close loopholes and crack down on circumvention and could target companies and countries that help Russia acquire sanctioned goods.
An intense diplomatic week is starting for the EU on Tuesday with the bloc determined to put support for Ukraine and sanctions against Russia at the centre of discussions.
The first summit of the week will be in Reykjavik, Iceland where the leaders of 46 members of the Council of Europe will convene. The leaders of France, Germany, Italy and the heads of the European Commission and Council will then head to Hiroshima, Japan, for a G7 leaders’ summit. The latter two will then hop over to Seoul for an EU-South Korea summit.
Ursula von der Leyen, the president of the European Commission, told reporters on Monday that the main underlying message the EU will be keen to push is the bloc’s united determination to support Ukraine for as long as it takes as it fights Russia’s invasion and to ensure Moscow is held accountable for the war and the atrocities committed.
At the G7 summit, where the US, UK, Canada and Japan, also sit at the table, the EU wants members to take stock of the packages of sanctions already rolled out against Russia as well as those in the making.
EU countries are currently negotiating an 11th round of sanctions aimed at closing loopholes and tackling circumvention. The new measures will allow the bloc to target companies and countries that are believed to help Russia evade the penalties.
One of the worries is that some third countries have been importing sanctioned EU goods and then exporting them to Russia, thus allowing Moscow to acquire dual-use technology that can be used by the military despite the bloc’s export ban.
Von der Leyen said of the planned measure that “it’s basically a warning that we are serious about our sanction that we could ban these goods from going to that third country if there is clear evidence that this is a circumvention of sanctions and deliverable deliveries to Russia.”
She also said the proposed raft of sanctions could extend the list of EU products banned from transiting via Russia.
“We see that there is a discrepancy between what starts in the European Union, transits Russia and then ends up in the third country. And therefore, we are discussing as a deterrent the question of whether there should be such a transit ban. There are several watch points within the mechanism to make sure that it is justified,” she added.
But the EU knows it also needs to focus on outreach, Michel said, in particular with developing countries to not only strengthen ties but also explain the sanctions against Russia.
This will be primarily addressed at the G7 summit where eight other nations — Australia, Brazil, Comoros, India, Indonesia, South Korea, the Cook Islands, and Vietnam — have also been invited.
Some countries in the Global South have repeated the Russian narrative that the West is endangering global food security despite the fact Russian agrifood products have not been sanctioned and can therefore be exported worldwide and transit through the EU.
“We will discuss openly and frankly about why we are convinced these sanctions are necessary and justified. Russian propaganda is built on lies and conspiracy. We are fighting back with the facts and figures,” Michel told reporters.
“Developing and emerging countries have expressed concerns that the G7 is focusing too much on Ukraine and not paying enough attention to their needs and priorities. And we have heard their concerns. We want to build strong partnerships with developing and emerging countries in ways that are mutually beneficial.
China will be the other main topic as the EU and other Western allies seek to “de-risk” by reducing economic dependencies on Beijing. The EU wants for instance to toughen its arsenal to ensure key infrastructure and technologies remain under European control with the deployment of an outbound investment screening or advanced export controls.
Finally, the green transition and the need to accelerate the rollout of clean tech should also be on the agenda of the various summits.
This is the year of late architect Paulo Mendes da Rocha at Casa da Arquitectura, in Matosinhos, northern Portugal. Two exhibitions dedicated to the Brazilian Pritsker opened to the public.
“I think it was the best exhibition I have seen of Paulo’s work, because in addition to being complete, it’s been very well taken care of… the photos, the models. I have never seen anything like this”, says Helene Afanasieff, the widow of Paulo Mendes da Rocha, one of the greatest Brazilian architects, who died in 2021.
Helene can’t hide her emotion. She has just attended, with her children and dozens of guests, the pre-opening of two exhibitions dedicated to the Brazilian Pritzker at Casa da Arquitectura (House of Architecture), in Matosinhos, northern Portugal.
Helene Afanasieff married Paulo Mendes da Rocha in 1974
Four years ago, the Brazilian architect donated the totality of his archives to the Casa da Arquitectura.
Helene recalls the controversy caused in Brazil by her husband’s decision: “You cannot imagine. The USP (University of São Paulo), the people in Brazil, were very offended”. But she says that her husband just replied: “I know how the collections are conserved at FAU-USP (The Faculty of Architecture and Urbanism, University of São Paulo). They are kept in tubes in the middle of the corridor. I am sure that Portugal will take good care of it”.
Paul is not here anymore, but Helene thinks he wouldn’t regret his decision.
Two exhibitions dedicated to Paulo Mendes da Rocha opened to the public on 26 May
“Geography is the first architecture”
Paulo Mendes da Rocha’s work over seven decades is revealed in the exhibition “Constructed Geographies: Paulo Mendes da Rocha”, in the main gallery of Casa da Arquitectura. An unprecedented extent has been extracted from the immense collection he donated to the Portuguese institution.
“We chose to work on the theme of geography, saying that this is the first architecture. When man arrives at a place and decides to implant his humanity, his daily life, his poetry there, that is the first architecture. All of us are architects in some way”, says Vanessa Grossman, co-curator of the exhibition along with Jean-Louis Cohen.
Vanessa Grossman and Jean-Louis, curator of the exhibition “Constructed Geographies: Paulo Mendes da Rocha”
Twelve major projects are featured from their origins to their current state, from Butantã House (1964-1967), in São Paulo, to some of his latest projects, like the National Coach Museum (2008-2015), in Lisbon, or Sesc 24 de Maio (2001-2017), in São Paulo.
Sesc 24 is one of Paulo Mendes da Rocha’s projects in focus at the exhibition
“Throughout his troubled career, which was marked by the dictatorship, and despite everything, he managed to make projects that range from true domestic experiments, like the house that became a space of invention for him, to a public school on the outskirts of São Paulo, where recreation gained a very broad dimension, but also apartment buildings and cultural facilities”, says Grossman.
The exhibition features 138 original drawings, original models and eight new models produced for this event, along with ten videos made for the exhibition about the architect’s featured works. There are also 44 original drawings by Flávio Motta related to the exhibition project of the Osaka Pavilion, which were censored by the military dictatorship in Brazil (1964-1985).
His architecture was very austere, very respectful of this economy of means, but very poetic.
Paulo Mendes da Rocha won the competition for Brazil’s pavilion at Expo’70 in Osaka
“His architecture was very austere, very respectful of this economy of means, but very poetic. So, there was this tension between poetics and austerity, which I think runs through his work, which is manifested, for example, in the beauty of the drawings, but also in the models he made out of paper”, highlights the curator.
Anyone who comes here and doesn’t know Paulo Mendes da Rocha’s work will practically discover the history of Brazil.
Breaking the association with concrete and metal
“I think he is an architect very much associated with the language of concrete and, later on, he experimented a lot with metal, but I think his work goes beyond this issue of matter and materiality,” explains co-curator Grossman. “I think that for him concrete was an opportunity, it was a field of invention, it was a technological field that would bring infrastructure.”
Grossman says that she and her colleague Jean-Louis Cohen “wanted to break this simplistic association between his architecture and concrete” in this exhibition. In fact, she thinks that “the great substance that runs through the exhibition is really water, the water of his childhood, of his father, who was a naval architecture engineer and he was very marked by the port experience, as he was born In Vitória” (on 25 October, 1928).
The exhibition will be on display until February 2024
“In Brazil, road transport has created a chaotic urbanism and an occupation of territory that is very irrational. So, he always talked about reversing the course of disaster through this reconciliation between cities and waters, which is somehow ecological thinking,” continues Grossman. “For some it is difficult to associate Paulo with ecology, but this issue between culture and nature is really very characteristic of his thinking and his buildings were, shall we say, a critical approach to the world”.
“Anyone who comes here and doesn’t know Paulo Mendes da Rocha’s work will practically discover the history of Brazil, the history of a very committed architect, who was very anchored in his adoptive city, São Paulo, despite coming from a port city, which is Vitória”, she concludes.
According to Jean-Louis Cohen, “this is not the building that Paulo made, but the building that made Paulo”
Talking with Paulo Mendes da Rocha
In the Casa da Arquitectura’s Gallery we can find another exhibition entitled “Paulo: Beyond Drawing – Talking with Paulo Mendes da Rocha”, curated by Marta Moreira and Rui Furtado.
Moreira shared her “immense joy and emotion” for having worked on what she described as a very rich process, having talked to many people who knew the architect, to get to know “the enchanting universe of Paulo’s ideas and work”.
“We were concerned with showing people in general that there was a very coherent, very consistent, very constant speech that guided Paulo’s life and, therefore, his work,” says Moreira.
Curators of the exhibition “Paulo: Beyond Drawing – Talking with Paulo Mendes da Rocha”
“We kept putting together small videos from different moments of Paulo’s speeches, whether more formal speeches, classes, or more informal conversations, and that’s how the exhibition was made”, she explains.
The Brazilian co-curator says Paulo Mendes da Rocha’s main principle is “the total negation of the exploitation of one person by the other” and this is reflected in his architecture, for example, “in building a city for all”.
“In this exhibition, we wanted people to be able to hear him”, says Portuguese co-curator Rui Furtado. “We wanted people to really hear him talking about what guided his life and what guided his life were very simple things and they were all linked to a concept that was the continuity of the human species on the planet. And he uses this concept as a criterion for the options and choices in his life”.
“Paulo: Beyond Drawing – Talking with Paulo Mendes da Rocha”
Parallel Programmes in Lisbon, São Paulo and New York
There is a parallel programme, curated by Nuno Sampaio, Catherine Otondo and Vanessa Grossman, that includes debates, conferences and site visits, with the most diverse personalities from the world of architecture who have crossed paths, directly or indirectly, with Paulo Mendes da Rocha.
The events will take place in Portugal, Brazil and the US.
A 456-page catalogue has been published in two independent versions, Portuguese and English, with critical essays by leading Brazilian, European and North American scholars revisiting the work of Paulo Mendes da Rocha. There is also an interview with the Portuguese architect Eduardo Souto de Moura, by the curators Jean-Louis Cohen and Vanessa Grossman.
The two exhibitions dedicated to Paulo Mendes da Rocha in Casa da Arquitectura (House of Architecture), in Matosinhos, northern Portugal,will be open until February 2024.
Before the push for the White House really gets rolling, digital assets – including bitcoins and CBDCs – are being hefted as ideological effigies, but will it matter?
Whether the crypto industry wants the spotlight or not, digital assets are among the earliest talking points in the 2024 U.S. presidential election, with the most prominent of the new candidates even invoking bitcoins in his campaign opener as evidence of President Joe Biden’s missteps.
In an election in which the heaviest fireworks will likely be seen on the side of the Republican challengers, former President Donald Trump – occupying the role as Biden’s leading nemesis – is himself facing an early-days threat from Florida Gov. Ron DeSantis, who immediately staked out crypto as a kind of political shorthand.
“The current regime, clearly, has it out for Bitcoin,” DeSantis said from his campaign’s Twitter Spaces launch pad, using crypto to represent innovation and personal freedom. “Bitcoin represents a threat to them, they’re trying to regulate it out of existence.”
If digital assets keep figuring into presidential politics, they’ll likely feature as a stand-in to illustrate the perceived abuses of the federal government, according to industry insiders and political experts. But the attention may not contribute to the policy progress crypto businesses crave, because the sector is waiting for comprehensive rules, not political sentiments.
So far, Biden’s administration is being accused of squeezing emerging crypto businesses and trying to set up a central bank digital currency (CBDC) to spy on citizens, according to DeSantis and one of Biden’s challengers from his own party, Robert F. Kennedy, Jr.
For DeSantis, his pro-crypto position also separates him from chief rival Trump. The digital assets views of the Republican frontrunner for the 2024 nomination have historically been rooted in distrust, with Trump having declared in 2019 that he was “not a fan” of bitcoin and other cryptocurrencies, “whose value is highly volatile and based on thin air.” However, more recently Trump profited from his own series of non-fungible tokens (NFTs), so his position remains murky.
Two weeks before DeSantis opened his campaign beside tech mogul Elon Musk, he sought to make a political moment out of his state’s “ban” of a U.S. CBDC. Experts in the commercial law Florida used to act against a potential digital dollar have said Florida’s effort isn’t a ban at all, but that might not matter for political supporters impressed by DeSantis’ zeal.
“He seems to understand that private solutions being developed in the crypto markets are likely to be superior, in part because they pose fewer risks to the individual liberty of the public,” said Dave Weisberger, CEO of CoinRoutes, a trading tech startup in DeSantis’ home state.
But DeSantis is generally vague about his defense of cryptocurrencies, and his remarks don’t seem to acknowledge they are online instruments that can operate outside the whims of sovereign states. When he says that Democrats – given another four years – will “probably end up killing it,” it seems to suggest the U.S. lawmakers would have more reach than they do, and that crypto won’t find homes in other global jurisdictions, such as in Europe.
“It’s more about how he’s trying to paint himself as a fresh face,” said Ron Hammond, director of government relations for the Blockchain Association in Washington. “He’s trying to say ‘I’m the younger gun here who’s trying to get something done.’”
In the know
A rival Republican candidate, Vivek Ramaswamy, has argued the Florida governor doesn’t know the topic well. The biotech entrepreneur told CoinDesk he’s pro-Bitcoin because he sees it as a “decentralized alternative” to the U.S dollar, improving the country’s financial infrastructure by presenting “a source of competition to the existing system.” And he says he understands it much more than DeSantis.
Other notable Republican candidates, such as Sen. Tim Scott (R-S.C.) and his state’s former governor, Nikki Haley, have reserved comment on the financial movement. Despite his position on the Senate Banking Committee that could help decide U.S. crypto’s fate, Scott has taken the most neutral possible stance, saying lawmakers should take a “thoughtful, bipartisan and balanced approach” to overseeing the industry in the U.S.
Among the Democratic challengers to standard-bearer Biden, Kennedy – who also holds other views that overlap with Republican positions – is fervently pro-crypto.
“Cryptocurrencies, led by bitcoin, along with other crypto technologies are a major innovation engine,” Kennedy wrote in a tweet earlier this month. “It is a mistake for the U.S. government to hobble the industry and drive innovation elsewhere.”
The most popular of the pro-crypto candidates among voters, DeSantis, still trails well behind Trump in primary polling, but the fact that there are multiple candidates saying nice things about digital assets is a positive for some in the sector.
“We now have three presidential candidates, spanning both political parties, who explicitly support the digital asset industry,” CoinRoutes’ Weisberger said. “While Republicans are trying to make crypto a partisan issue, the industry itself doesn’t believe it should be, which is why the support from RFK Jr. is also potentially important.”
Biden is the only candidate with a federal record on digital assets. So far, his administration hasn’t set down any significant crypto policy, and the financial regulators he picked have taken a staunchly critical view of the industry. His Securities and Exchange Commission chief, Gary Gensler, may be the most antagonistic of the bunch, combating digital assets businesses in courtrooms and with his agency’s rule proposals. And the direct messages from Biden’s Department of the Treasury and his own White House have been increasingly suspicious of the industry.
Though it wasn’t a campaign remark, Biden, who last month formally announced
CoinDCX, CoinSwitch, WazirX and other Indian firms CoinDesk spoke to think they’ll survive the ongoing bear market – here’s how.
Indian crypto exchanges are in survival mode, cutting costs wherever possible, re-negotiating partner contracts, suspending employee pay-hikes, conducting lay-offs, exploring new revenue models and rebranding themselves, all in an effort to extend their financial runways – when they run out of money.
CoinDesk spoke to employees and senior executives at six prominent Indian crypto platforms – CoinDCX, CoinSwitch, WazirX, BuyUCoin, ZebPay and Giottus. Several of these exchanges said their runways range from 21 months to four years, which can, if true, likely take them into the next bull market. CoinSwitch and ZebPay did not share their financial runway timelines.
The survival of India’s crypto exchanges has been a concern since Feb. 1, 2022, when the nation announced stiff taxes – a 30% tax on crypto profits and the more controversial 1% tax deducted at source (TDS) on all transactions. At the time, local industry leaders said they had entered a “period of pain” but that “ultimately, technology always emerges, it always wins.”
Signs of a crypto “brain drain” emerged within weeks. Ten days after the taxes were implemented, crypto trading volumes plummeted, in some cases more than 70%. India’s government then imposed a “shadow ban,” which saw local payment processors cut off banking access to crypto exchanges.
Four months into the imposition of the 30% tax, the industry’s advocacy body was disbanded and enforcement agencies were investigating at least 10 crypto exchanges for allegedly assisting foreign firms launder money via crypto. Soon, the world took note and global industry leaders such as Binance CEO Changpeng ‘CZ’ Zhao claimed India’s taxes would probably “kill the industry” in the country.
By 2023, data revealed crypto traffic in the nation continued its nosedive and that Indians had moved more than $3.8 billion in trading volume from local to international crypto exchanges.
India, as president of the Group of 20 (G-20) in 2023, has prioritized framing globally coordinated rules for the crypto sector. As a result, experts say, it needed to align with the guidelines of the global standard setter, the Financial Action Task Force (FATF) on virtual assets by including Indian crypto business under anti-money laundering rules.
This move, which adds some legitimacy to the sector by way of setting up regulatory oversight, has fueled a little optimism among Indian exchanges on the local industry’s longevity, even if the nation doesn’t change its tax regime, according to several industry officials. But they don’t have an answer to what happens if the tax regime stays the same – and are taking various steps to guard against such a scenario.
CoinDCX
Indian crypto exchange CoinDCX is weathering the storm by diversifying and banking on its recent series D funding of $135 million.
“We have a runway of four years,” under present conditions, said Neeraj Khandelwal, co-founder of CoinDCX and Okto. “Our biggest bet is on our Okto Wallet. We believe DeFi [decentralized finance] will offer 10X value eventually as only 6.5 million DeFi customers exist, while there are 400 million crypto investors.”
CoinDCX has been leading engagement with lawmakers through the industry’s policy advocacy body, Khandelwal said, exemplified by a recent event, and has emerged as a major player in the Indian crypto industry after recent setbacks faced by WazirX, who ostensibly led the industry in policy engagement before CoinDCX.
Its strategy, Khandelwal says, is “investing heavily in innovation and technology,” including hiring in the space “even now” as we “never overhired.”
WazirX
WazirX, India’s biggest exchange by trading volume until recently, continues to survive despite a tumultuous year.
The exchange’s future seemed uncertain when its founder Nischal Shetty moved from India to Dubai to focus on a new project late last year. Later, Indian agencies that were investigating local crypto exchanges raided properties tied to a director of WazirX. Shortly after, Binance CEO Zhao and Shetty were involved in a public spat over who truly controls the exchange – a quarrel that continues to this day.
The events have seen the exchange lay off 40% of its staff. Yet, the exchange has a 21-month runway, said an employee who was not authorized to speak publicly about the company. “But employees who deserve pay hikes won’t be getting them,” he said.
WazirX’s survival strategy is to renegotiate contracts with partners including software vendors, the person said. Unlike some other exchanges, WazirX will not be diversifying. It will stay focused on crypto.
“That’s what the founders enshrined into us,” the person said. “The idea is to survive because [the] Bitcoin halving is going to happen in May 2024 when, we hope, a bull run will come. By then, if things don’t break, we should be around to see it.” The Bitcoin halving is when the total number of bitcoin that miners can potentially win is halved. This happens roughly every four years.
WazirX also plans to “keep chipping away at costs constantly to extend the runway” and capitalize on its 15 million registered users to attract lucrative partnerships, like a recent one with tax solutions provider TaxNodes.
CoinSwitch
CoinSwitch shed “Kuber” from its previous name, CoinSwitch Kuber, and pivoted from being a crypto exchange to a crypto investment platform.
This occurred as India’s taxes, the crypto winter and the ire of Indian agencies all hit the platform hard. CoinSwitch properties were raided by Indian agencies in August 2022.
“CoinSwitch has always been conscious of its expenses,” said Ashish Singhal, the company’s co-founder and CEO. “Today, we are proudly serving more than 19 million registered users, and are excited to grow and evolve with them by providing them with a diverse range of investment options, including fixed deposits (FD), mutual funds, Indian stocks, and more.”
Without giving a timeline on its runway, Singhal said “our healthy runway gives us enough ammunition to invest in our long-term vision – to be a one-stop wealth-tech destination for Indians.”
Singhal also said his company has “strengthened its leadership team by hiring industry experts,” presumably to navigate regulators, even if he added that the recent step to bring crypto businesses under anti-money laundering rules was a “significant positive advancement.”
ZebPay
One of India’s first crypto exchanges, ZebPay, also refused to share a timeline on its runway. But Chief Revenue Officer Nirmal Ranga said it had support from an unnamed subsidiary in Singapore, in the event it loses customers, the bear market extends or things generally go from bad to worse.
“Our internal revenue strategy is to increase the lending value of our customers and concentrate on user growth,” Ranga said. “We are also trying to create interest for institutional investment.”
Given ZebPay’s team has seen crypto’s early up and down cycles, it follows two ways to survive – “use profits made during previous bull runs or use funds from marketing partnerships or investors,” Ranga said. Like WazirX, ZebPay also has a partnership with TaxNodes.
BuyUCoin
Another early player in the Indian crypto space, BuyUCoin, said its runway extends until early 2025.
“By the end of 2024, we will see a good bull run,” said Atulya Bhatt, its co-founder. “Crypto is a seasonal market and every four years bitcoin goes up and down. It will take 10 years for crypto to become completely sustainable.”
Nevertheless, BuyUCoin had to lay off 10% of its 100 people workforce, Bhatt said. At the same time, BuyUCoin has set up sister companies in Estonia and Singapore as part of a global expansion plan.
“Since we have never raised funds, we can now, given interest from partners across the globe,” he said.
Giottus
After FTX’s implosion, crypto entities scrambled to publish proof of reserves. Giottus, a lesser-known Indian exchange recognized for its staking service and multilingual options in the country, said it would provide customers with proof of reserves, while rivals remained silent.
“We have a two-year runway under the current conditions,” said Vikram Subburaj, Giottus’ co-founder and CEO. “Our focus is completely on bringing in operational excellence, building your products right, drastically cutting marketing and acquisition expenses, and reducing perceived risks associated with exchanges.”
In terms of employees, Subburaj said Giottus had a compact marketing team even during bull runs and like others, it partnered with TaxNodes to improve operational support.
The mining firm, which has been embroiled in several legal battles, describes an elaborate fraud scheme for a $150 million contract.
New York crypto miner Coinmint alleged two semiconductor companies set up an “elaborate deception” to lure the miner into a $150 million purchase agreement, in a lawsuit seeking over $23 million in damages.
Coinmint alleged that bitcoin technology firm Katena Computing and semiconductor designer company DX Corr set up a scheme to convince it to buy up to $150 million of bitcoin mining machines that Katena couldn’t and didn’t plan to deliver on, according to a lawsuit filed with a court in California’s Santa Clara County Superior Court on Jan. 26.
Under the scheme, Katena “improperly influenced, bribed or incentivized co-conspirators,” including one unnamed person within the mining firm, for a $150 million purchase of bitcoin mining machines, Coinmint alleged.
The lawsuit alleges fraud, breach of contract and fiduciary duty, as well as aiding and abetting against DX Corr and its executives as well as former Coinmint employees. Coinmint is asking for “actual, compensatory and consequential damages, including but not limited to the $23 million,” that it deposited for the sale, as well as punitive and exemplary damages.
“Katena is in binding arbitration concerning Coinmint’s breach of contract and is seeking damages caused by Coinmint’s failure to pay. Katena is eager to talk openly and factually about this dispute but will honor the arbitration process and its confidentiality requirements. When we can talk more openly, we will,” said a spokesperson for Katena.
DX Corr filed a motion to dismiss the lawsuit earlier this month, saying Coinmint didn’t sufficiently bring any claims to support its allegations against the semiconductor firm.
Coinmint is no stranger to litigation. Its two cofounders fought over the firm’s ownership. Coinmint filed a complaint with the New York Public Service Commission against the utility of Plattsburgh, where it operates, to avoid paying a deposit related to its electricity use. It was also involved in a tax fraud case in Puerto Rico, where it is headquartered, that was settled under a confidentiality agreement, said a source close to the matter.
Coinmint denied the existence of the alleged tax fraud case and declined to comment on this story.
Court records show the municipality of San Juan sued Coinmint in March 2022, and a judge known for their tax expertise was assigned to the case. The court did not respond to CoinDesk’s request for the complaint at the time of publication.
DX Corr did not respond to CoinDesk’s request for comment.
Back in 2021, an unnamed Coinmint employee initiated conversations over the purchase of equipment. “Katena engaged in an elaborate deception” to get Coinmint’s founder and CEO Ashton Soniat on board with [claims] that it ‘truly possessed a revolutionary chip design that would disrupt the Bitcoin mining world,’” the lawsuit said.
The unnamed individual was the Coinmint chief financial officer at the time. According to a filing with the U.S. Securities and Exchange Commission and a LinkedIn, a person named Michael Maloney was Coinmint’s CFO at the time. Maloney declined CoinDesk’s request for comment through LinkedIn.
Katena was dangling an offer for the position of CFO and equity as part of the plot to Maloney, said the lawsuit.
The then-CFO asked Katena to recommend a semiconductor expert to perform due diligence on the machines. But Katena suggested Robert Bleck as an independent observer, even though he was in fact in collusion with DX Corr executive and Katena minority shareholder Sagar Reddy, Coinmint alleged. Bleck was Reddy’s “b***h,” the lawsuit read.
Bleck misrepresented Katena’s semiconductor design and production capabilities to the Coinmint CFO, who then tried to convince CEO Soniat.
Soniat signed a sales contract in May 2021 which “obliged Coinmint to pay Katena $150 million for miners without security or customary protection” according to Katena.
Katena also used the contract to try to get funding from investors, including investment bank JP Morgan, said the lawsuit.
When the CFO left Coinmint, two other individuals took the role of convincing Soniat to continue sending deposit payments. The two were also planning a hostile takeover of Coinmint and eventually parted ways with the miner.
Coinmint ultimately sent deposit payments of $23.4 million to Katena with no contractual protections and allegedly received nothing.
With facts hard to come by, a coterie of crypto players are taking action.
Key players in the crypto ecosystem are shoring up their defenses amid growing concerns over the state of Multichain, a major venue for moving assets between different blockchains.
Four days after apparent technical issues started throttling some users’ ability to withdraw tokens from the protocol, wild rumors over Multichain’s safety and the fate of its team are filling the void created by the platform’s silence. A single tweet blaming some cross-chain breaks on “force majeure” has only added fuel to the widespread speculation that something is amiss.
The light-on-facts landscape is pushing a growing number of entities to mitigate risk now – regardless of Multichain’s true state. Their responses are highlighting how crypto bridges create the potential for a world of hurt that goes well beyond the flashiest and well-trodden risk to bridges (getting hacked by North Korea).
The situation is compounded by Multichain’s prominence among bridges. It is the third-largest bridging protocol by transfer volume and total value locked, according to data from Messari and DeFiLlama.
Like most bridges, Multichain uses a mint-and-lock mechanism to move assets between the 92 blockchains it interacts with. For example, if a holder of USDC stablecoin bridges the asset from Ethereum to Fantom via Multichain, the token gets locked up in a smart contract on Ethereum and then issued anew on Fantom – in this case, as a “wrapped” token called anyUSDC.
Multichain’s anyUSDC and other wrapped USDC tokens like it dominate 50% of Fantom’s stablecoin market, according to DeFiLlama. This is in spite of all USDC on Fantom being “bridged” assets instead of “native” that Circle issues directly onto the chain. Thus, all the USDC tokens on Fantom are reliant on bridges to retain their value.
This setup works as long as the bridge does. At the height of Multichain’s troubles this week, it didn’t, and wrapped USDC tokens on Fantom lost their dollar peg. Some arbitrage traders told CoinDesk they bought wrapped USDC tokens at a 30% discount during the fracas over Multichain, which is responsible for 80% of the stablecoins on Fantom.
Binance, the world’s largest crypto exchange, seemingly pointed to the risks of non-native assets Friday with a tweet imploring traders to “remember to check you trust the issuer behind stablecoins you hold.”
The Fantom ecosystem’s high reliance on Multichain hasn’t spooked market participants into a mass exodus quite yet. Overall numbers like total value locked remain rather steady despite some outflows to other chains, according to data from terminal-builder Parsec.
“The multichain bridge is fully operational and safe with Fantom. Whatever is happening internally with multichain has no impact on the bridged assets on Fantom,” Michael Kong, CEO of the Fantom Foundation, told CoinDesk.
This chart shows anyUSDC transfers from Fantom (blue) and other chains into Arbitrum over the last 10 days. The uptick corresponds with the swirling rumors. (Parsec)
Squid Router – a bridging protocol built on Axelar that unlike Multichain uses swaps instead of wrapped tokens to move value across chains – also reported a surge in activity during the Multichain madless. Bridge transactions on Axelar itself increased sixfold during the spike, people familiar with the matter said.
But Multichain’s method of wrapping assets to bridge them has spooked players beyond the stablecoin markets. On Thursday, Binance said it would temporarily suspend deposits in 10 Multichain-bridged tokens “while we await clarity from the Multichain team.”
Bridging aggregation service Li.Fi also took preventative measures yesterday and shuttered access to Multichain.
Amid all this Multichain’s namesake asset MULTI has suffered. It was trading at $3.8 at press time, a 54% drop from where it was before the crisis of confidence began.
Hong Kong has said it wants to be a crypto hub but its banks are rejecting account opening applications.
Crypto companies’ applications to operate in Hong Kong following its push to reinstate itself as a crypto hub have been piling up, but these companies are finding it difficult to do something as basic as open a bank account.
Applicants told CoinDesk that just eight officers at the Securities and Futures Commission (SFC) are handling around 80 applications, and even licensed firms are running into difficulties when it comes to bank accounts.
“This probably would have been a different story six or nine months ago,” Amy Yu, APAC CEO for crypto bank SEBA, told CoinDesk.
Hong Kong has become a jurisdiction that companies are considering, after regulators relaxed their opposition to the sector, even as other countries look more critically at crypto. Singapore’s financial regulator has made it clear to the market that it will be less supportive of what it considers to be speculative, and the U.S. looks less than friendly to crypto.
Hong Kong’s de facto central bank knows that banking access is an issue for crypto companies. The Hong Kong Monetary Authority (HKMA) has reminded banks that there’s no ban on offering crypto firms accounts, but a roundtable it organized last month, attended by banks and crypto firms, focused only on easing access for firms that already held or which were applying for licenses, an attendee told CoinDesk.
“It was more like a wish list from the regulator,” he said. “Whether the banks fully embrace it is another matter.”
CoinDesk spoke to a C-suite executive at a crypto firm based in Hong Kong that holds a Type 9 license, which allows the company to carry out asset management activities. The company was still unable to open a Hong Kong bank account and relied on overseas banking partners. This executive said that this made on- and off-ramping difficult for potential investors.
“It’s not clear to us what extra information the banks need,” she told CoinDesk. “Internally, they don’t seem sure about what they want from us.”
Facing rejection
Venture capital firm Braeside founder Tak Lo told CoinDesk that “many crypto companies present themselves as other firms other than asset management firms in order to facilitate bank account opening.”
When companies are upfront about what they do, that can mean their applications are rejected.
Prosynergy managing director Louie Lee told CoinDesk that opening bank accounts is an “acute issue” at the moment, and that banks can be “sensitive and restrictive in their approach.”
Amidone all the talk of licensing and regulations in Hong Kong, “not all crypto-related activities require a license,” Lee continued. “You may be operating in an unregulated space, but this does not mean it’s illegal,” he said.
“The process is you apply and you get rejected,” Jehan Chu, founder of crypto venture capital firm Kenetic, told CoinDesk.
Even if firms manage to get accounts, Chu added, “six months later you get it shut down for no reason.” He said that firms try to stay low-profile.
Sometimes firms opt to buy an expensive insurance or investment product so that their relationship is more valuable for the bank.
It’s considered the cost of doing business since banks are for-profit entities after all. But that kind of decision doesn’t make sense for many startups.
Keeping accounts open
Even players who have successfully opened bank accounts “have a lot of uncertainty on whether or not they can continue having that account going forward,” corporate credit card issuer Reap co-founder Kevin Kang told CoinDesk.
This uncertainty means they’re constantly on the look out for new options and opportunities to set up bank accounts.
“They don’t have visibility on when they’re going to be checked,” Kang said, referring to banks examining transactions.
When transactions are targeted by a compliance team within banks, it can mean the company is unable to use that account. Unless they provide a certain amount of documentation within a period of time on those transactions, their transactions may be stopped and sent back.
Firms are subject to the whims of the bank account providers and end up dedicating resources to opening bank accounts.
It’s not the first time an industry in Hong Kong has encountered issues with bank account opening.
Kang points to money-service operators who held licenses from the Customs and Excise Department that enabled them to exchange funds. Banks were reluctant to serve them due to perceived anti-money laundering and counter-terrorist financing risk.
Policies or actions from the regulator may give the banks more confidence such as having deposit requirements, Kang said.
Lee added that it doesn’t help that another Asian financial hub, Singapore, has had trouble with the collapses of crypto companies which did hold licenses, like Three Arrows Capital.
Some local players have stepped into the space, with virtual bank ZA Bank presenting itself as the go-to bank for Web3 businesses.
Following the collapse of crypto-friendly bank Silvergate, “inquiries have increased enormously,” ZA co-head of retail banking Devon Sin told CoinDesk.
Most players who CoinDesk spoke to were optimistic about future discussions on banking between the industry and the regulators.
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Of the roundtable last month, Lee told CoinDesk, “It’s a step in the right direction whereby people can have a constructive discussion with the regulators on their challenges and the regulators are proactively seeking solutions.”
100-odd companies could be registered in France as the just-agreed MiCA EU crypto legislation beds in, Financial Markets Authority officials said
PARIS, France – Crypto companies fleeing U.S. regulatory uncertainty have been offered a welcome in France, by officials boasting a regulatory framework that offers relative predictability.
The European Union member already boasts around 74 registered crypto companies – a number that could surge to 100 as a last round of firms seek to anticipate the EU’s Markets in Crypto Assets rules that were formally signed off by ministers earlier Tuesday.
“In France, we are proud to be pioneers” with the crypto service asset provider regime, known as PSAN, that was legislated in 2019, Benoît de Juvigny, Secretary General of the Autorité des marchés financiers (AMF), told reporters Tuesday.
“If American players want to benefit, in the very short term, from the French regime, and from the start of 2025 from European arrangements, clearly they are welcome,” he added. “We have good relations and discussions with our U.S. counterparts.”
The legal certainty now apparently achieved in France is only recently gained. In January, lawyers were warning that legislative amendments proposed by the national Senate – eventually watered down – could kill innovation.
There are also still some gray areas: French lawmakers are still pondering what kinds of crypto social media influencers should be able to promote. The EU is still deliberating on how to regulate financial services that have no central entity, and Juvigny said the AMF will produce a paper with some ideas in the coming weeks.
But essentially the legal framework is all but nailed down, contrasting sharply with the situation across the Atlantic. In recent weeks, players including Bittrex and Coinbase have quit the U.S., or threatened to, citing the uncertain regulatory environment caused by active regulatory enforcement, combined with no obvious prospect of a crypto law from Washington.
Not easy
France may be predictable and stable, but that’s not the same as being easy or straightforward.
Seventy-four companies, including Binance and Bitstamp, have already been awarded a registration demonstrating basic governance and money-laundering compliance. Firms can also take the further step of seeking a license, if they have enough capital, though no company has yet acquired one.
Under new transitional measures agreed earlier this year as a bridge to MiCA, companies applying as of July will undergo a “reinforced” registration, in which they have to prove they have resilient IT systems and a conflict of interest policy. MiCA itself, set to take effect in 2025, grants the right to serve the pan-European market, and extends wider to include services such as crypto investment, advice and portfolio management.
That web of four different coexisting regimes is complex, as de Juvigny himself concedes – but officials are keen to bat off complaints from the industry that some requirements are impossible to meet in practice, and procedures unduly lengthy.
Complaints
Contrary to some industry concerns, officials say it’s indeed possible for crypto firms to get commercially insured to AMF standards. “I’ve seen the contracts with my own eyes,” Stéphane Pontoizeau, a director at the AMF responsible for supervising market infrastructure and intermediaries, told reporters.
Those who do their homework by studying the AMF’s guidelines will find they can acquire a new status in just a few months, Pontoizeau said – adding that those who find it takes longer often didn’t get their house in order.
With dozens likely waiting in the wings to get registered, there could be around a hundred companies on the “start line” in France before MiCA kicks in, Pontoizeau said – though some, headquartered in other EU member states or serving only the French market, may not seek a full AMF license under the EU law.
And for some, France’s rigor may be the point – such as Circle, the stablecoin issuer which has applied for registration from the AMF, and said it also wants to seek a license.
Together with the ACPR, the arm of the French central bank responsible for vetting crypto companies’ money laundering compliance, “the AMF … have a strong reputation for being a major market regulator that is forward thinking but manages risk well,” Circle’s Vice President for Policy and Regulatory Strategy Teana Baker-Taylor told CoinDesk. “It’s not a light touch jurisdiction.”
An Indian crypto exchange and a policy firm have separately asked the government to let crypto firms access the national Unified Payments Interface (UPI) after it was ostensibly suspended in 2022.
India’s government and central bank have received proposals asking to restore access of the Unified Payments Interface (UPI), a widely popular real-time payment system, to the crypto industry, several sources familiar with the matter have told CoinDesk.
Two proposals have already been made. A third proposal will be made “in the coming few weeks” by India’s newly formed crypto policy advocacy group, the Bharat Web3 Association (BWA), one individual familiar with the decision told CoinDesk.
The proposals, while not coordinated, appear to be the first major push by India’s crypto stakeholders to seek policy changes that govern the burgeoning industry since it suffered a series of blows in the form of harsh taxes, a crypto winter, and a “shadow ban.” The shadow ban saw Indian payment processors cut off banking access to crypto exchanges. UPI services were ostensibly suspended around the same time last year.
Since the pandemic, UPI adoption in India has rapidly increased with approximately 74 billion UPI transactions worth $1.5 trillion conducted in 2022. UPI allows citizens to pay for groceries and other goods using a QR code linked to their bank account. The system is used nationwide because merchants aren’t charged any fee for accepting UPI payments.
How Indian exchanges lost UPI access
The trigger for the payment rail crisis appeared to be Coinbase’s launch in India. On April 7, 2022, Coinbase launched its India operations with executives touting how easy it would be to trade on the company app with payments being processed by UPI. Hours after the event, the National Payments Corporation of India (NPCI) – the entity that governs UPI – tweeted to clarify that it was “not aware of any crypto exchange using UPI.” The NPCI is under the aegis of the nation’s central bank, the Reserve Bank of India (RBI).
One proposal to restore UPI access was made by an Indian crypto exchange that asked not to be identified because the matter hasn’t been made public. “We have submitted a representation with the NPCI, seeking the removal of restrictions on use of UPI services,” the crypto exchange said in a statement shared with CoinDesk.
The proposal was made shortly after India added crypto to anti-money laundering rules (PMLA or Prevention of Money Laundering Act), making crypto exchanges, non-fungible token (NFT) marketplaces and custody service wallet providers legally responsible for monitoring suspicious financial activities in March 2023. The jury on what this meant for India was divided. Legal experts said this gave teeth to the regulators overseeing the industry for the first time. At the same time, advocates of the crypto industry said this gave “more legitimacy” to the sector because “adding crypto to anti-money laundering rules is some semblance of regulation,” a senior industry participant said Monday.
“Our submission highlights that VDA (Virtual Digital Assets) service providers are now covered as ’reporting entities’ under the PMLA and are also registered with the FIU (Financial Intelligence Unit). We believe that these guardrails go a long way in helping secure VDA transactions and arresting malfeasance, if any,” the same crypto exchange’s statement said.
The second proposal, made in tranches over the past few weeks – both before and after India added crypto to anti-money laundering rules to different authorities – came from public policy advisory firm Black Dot, its founder Mandar Kagade told CoinDesk. The firm has previously collaborated with the Indian government. CoinDesk has seen an email from the Finance Ministry acknowledging Black Dot’s proposal and other emails confirming the firm sent the proposal to entities like the NPCI, the RBI and Jayant Sinha, the chairperson for the Standing Committee on Finance.
What Black Dot’s proposal contains
Black Dot’s proposal argues that UPI’s seamless user experience encourages transactions to remain onshore providing a visibility trail for regulators and law enforcement. Citing the Economic Times, it said 80% of digital asset transactions may be conducted on a peer-to-peer basis since the closure of UPI access. The proposal also says “arbitrarily denying a class of investors from accessing instruments of their choice via UPI when another group of investors has access to their choice (e.g., IPO) may also violate Article 14 (equality before the law).”
The proposal asks NCPI to group crypto exchanges based on how they meet agreed norms among banks.
It’s unclear whether authorities will restore UPI access to crypto exchanges but doing so would lend credibility to the space while making it much easier for retailers to start or continue trading on crypto exchanges.
CoinDesk has reached out to the Finance Ministry, RBI, NPCI and BWA for comment.
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