Crypto.com Asks for Loan Repayment

Crypto.com reportedly asked customer's in "excluded jurisdictions" to repay crypto loans by March 15th

According to emails received by Coindesk, customers in France and Germany received emails informing them that loans were no longer supported in their jurisdiction.

According to a tweet from @watcherguru customers in the US, and UK also received these emails. This has yet to be fully corroborated. The connection between this development and the impending executive order from the White House is unclear but could be playing a role.

This comes in the wake of BlockFi recently settling with the SEC for issuing interest earning accounts as unregistered securities. Is it possible that these crypto backed loan products are being considered unregistered securities as well, and the SEC is beginning to crack down? Typically loans are not considered a security. According to the 1933 securities act:

The Supreme Court held in Reves v. Ernst & Young that every note is presumed to be a security, but that presumption can be rebutted by showing that the note bears a strong resemblance to a judicially crafted list of notes that are presumed not to be securities. Included in this list of non-securities are:

1. note delivered in consumer financing

2. note secured by a mortgage on a home

3. short-term note secured by a lien on a small business or some of its assets

4. note evidencing a character loan to a bank customer

5. short-term note secured by an assignment of accounts receivable

6. note which formalizes an open-account debt incurred in the ordinary course of business

This will be something to monitor as more information comes to light in this regard.

President Biden Announces a Ban on Russian Oil Imports

In a show of force, President Biden announced a ban on Russian oil imports to the US. The US imports about 8% of its oil from Russia, approximately 650,000 barrels a day. The US has been producing approximately 11 million barrels of its own oil a day, and in large part imports most from Canada. The European market is expected to be hit hardest, as after this announcement, Russia fired back, stating they would cut off oil and raw materials exports until December 31st.

Could this be a move to push conversion to electric vehicles, and a move away from petroleum? According to the US energy information agency, In 2021, about 4,116 billion kilowatthours (kWh) (or about 4.12 trillion kWh) of electricity were generated at utility-scale electricity generation facilities in the United States. About 61% of this electricity generation was from fossil fuels—coal, natural gas, petroleum, and other gases. About 19% was from nuclear energy, and about 20% was from renewable energy sources. There are currently ~284 million registered vehicles in the US, of which ~2.3 million are EVs (0.8%). Doing some quick back of the napkin math, a Nissan leaf has a 62kwh battery, and gets approximately 180 miles per charge. The average American drives 39 miles per day, requiring a charge approximately every 5 days. That means, the average American would use an additional 4,526kwh per year charging their electric vehicle. If all vehicles were to become electric, that would require an additional 1.3 trillion kWh of electric capacity. With 61% of current electric generation coming from fossil fuels, converting to a truly renewable EV seems like an uphill battle.

Bring in Bitcoin..Bitcoin mining has the ability to supply baseline profitability to energy producers as they build out their renewable energy production in anticipation for the massive energy requirements of EVs. I believe the oil embargo on Russia may have an unintended effect of further embedding Bitcoin mining into the US's energy infrastructure. I hope to go further in detail on Bitcoin mining's capability here in a forthcoming article.

Thailand relaxed tax rules for investments on digital assets

According to Reuters, today, Thailand's cabinet, relaxed tax rules on digital assets to help foster the industry in country as crypto trading has become Southeast Asia's second-largest economy. Bitcoin is the country's most popular cryptocurrency. These traders will be exempt from a 7% VAT. Traders will also be able to deduct their losses against their gains. These new rules will be in effect until the end of 2023.