Emerging markets could be the next big frontier for crypto. A slew of politicians want to follow El Salvador and adopt bitcoin as legal tender.

2021 03 23T153223Z_1_LYNXMPEH2M171_RTROPTP_4_FIDELITY CRYPTOCURRENCY.JPG
  • Emerging markets are pioneering digital and crypto currency usage, trading and mining.
  • Since El Salvador voted to adopt bitcoin as legal tender, a slew of politicians have said they want to follow suit.
  • Many showed their support through tweets or by adding the symbolic laser eyes to their Twitter pictures.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Cryptocurrencies can often stir up concern among conservative investors and few are as conservative as central banks, and regulators are definitely skeptical. But this does not appear to be the case in emerging markets.

Politicians, central bankers and regulators across the developed world might be a little wary, but those in the emerging world are pushing the boundaries of crypto adoption, by pioneering how digital tokens are used, traded and mined.

In fact, they could become crypto’s next big frontier, as a slew of politicians from Brazil, and Argentina and even Tonga have publicly stated that they want their countries to follow the example of El Salvador in making cryptocurrencies legal tender.

El Salvador’s Congress approved a law last week that made the small Central American country the first to accept bitcoin as legal tender, giving it equal status to the US dollar in El Salvador.

“Other countries will follow El Salvador’s lead for two main reasons, making bitcoin legal tender will attract Bitcoin entrepreneurs and ease the burden of sending money internationally.” Edward Moya, senior market analyst at OANDA told Insider.

Indeed, since El Salvador’s president Nayib Bukele first announced the bitcoin bill, a slew of other emerging markets politicians have said that their own countries should follow suit.

Paraguayan congressman Carlitos Rejala tweeted “This week we start with an important project to innovate Paraguay in front of the world! The real one to the moon #btc & #paypal”.

Gabriel Silva, a congressman from Panama said his country could not afford to be left behind and a broader adoption of crypto was necessary for the country to attract technological innovation and entrepreneurship.

Brazilian politician Gilson Marques and the Argentinian Francisco Sánchez were among those who added laser eyes, a symbol used by bitcoin bulls, to their public profile pictures.

Central banks around the world are considering launching their own digital currencies that would be centrally managed and regulated – a key difference to existing cryptocurrencies like bitcoin.

The Federal Reserve and European Central Bank are still in the very early stages of looking into a digital currencies, while many emerging-market central banks are making fast progress in the area.

“Their use in small-scale trading and remittance transfers from workers abroad are among the main reasons for the popularity of crypto currencies in EM. Central bank digital currencies (CBDC) could also facilitate getting social transfers to the poor and improve transparency of the large informal economy. These channels could be positive for economic growth in EM.” a recent Bank of America research note said.

The popularity and value of crypto currencies like bitcoin and ether has boomed over the past year. They’re both an asset class in their own right, as well as a means of payment for goods and services. Various sports teams like the Dallas Mavericks or Oakland A’s for example accept cryptocurrencies as payments for tickets or merchandise.

In El Salvador, a whole town was already running on crypto – El Zonte, also known as ‘Bitcoin Beach’. Soon the whole country could now be working in similar ways and, if some politicians get their will, other emerging markets countries could as well.

El Salvador’s decision has however been received cautiously by regulators and politicians in developed markets. Bank of England Governor Andrew Bailey said just this week that cryptocurrencies are too volatile to be used as a payment form.

And the World Bank rejected El Salvador’s request to help with the implementation of bitcoin over environmental concerns linked to crypto mining. Further, regulators have shown concern about the use of crypto to fund illicit activities.

Bitcoin is already up by 300% in the last 12 months and, if more countries adopt it, it should stand to gain even more, even though regulators are tightening their scrutiny of the market, analysts said.

“Bitcoin becoming legal tender in other countries should support the bull case for bitcoin,” OANDA’s Moya said.

Read the original article on Business Insider

Fleets of fishing ships are going ‘dark’ in the South Atlantic, and China is the leading culprit

Chinese fishing boats
Fishing boats moored at the Huangsha Port in eastern Jiangsu Province, China, on May 4, 2021.

  • Hundreds of ships spent nearly a million hours off Argentina between January 2018 and April 2021.
  • They appeared to be fishing, and many went “dark,” presumably to hide where they were doing it.
  • A report from nonprofit Oceana found that Chinese-flagged fishing vessels were the biggest culprit.
  • See more stories on Insider’s business page.

Since 2018, hundreds of ships have trawled the edge of Argentina’s waters, conducting what is suspected of being illegal fishing and obscuring their locations to do so.

Between January 1, 2018, and April 25, 2021, more than 800 fishing vessels spent 900,000 hours doing what appeared to be fishing within 20 nautical miles of the boundary between Argentina’s exclusive economic zone and the high sea.

The analysis by Oceana, an ocean-conservation nonprofit, found that 69% of the visible activity was done by more than 400 Chinese-flagged fishing vessels.

In comparison, nearly 200 vessels under South Korean, Spanish, or Taiwanese flags conducted 26% of that visible fishing, while 145 Argentine fishing vessels did less than 1%.

Argentina China coast guard fishing
An Argentine soldier fires at a Chinese fishing boat during a pursuit in Argentine waters, February 22, 2018.

More worrying were the 6,227 “gap events” Oceana detected over that period, in which vessels were not visible on electronic trackers for more than 24 hours, possibly because they disabled their Automatic Identification Systems, or AIS.

These vessels were invisible for more than 600,000 hours. Two-thirds of the ships that went “dark” were Chinese-flagged squid jiggers – the most common type of ship in the region – though Spanish trawlers were “dark” more than three times as often as Chinese ships.

Most of the “dark” vessels appeared to have their AIS off for one to four days at a time and mostly disappeared about 5 nautical miles from the boundary of Argentina’s exclusive economic zone. (Coastal states have rights to resources within their EEZs, which extend 200 nautical miles from shore.)

“Disabling AIS hides fishing vessel locations from public view and could mask potentially illegal behavior, such as crossing into Argentina’s EEZ to fish,” Oceana said in its report.

China Argentina dark fishing Oceana

More than half the vessels that went “dark” encountered another vessel within a month of doing so, suggesting at-sea transshipment, through which illegal catches can be mixed in with legally caught fish, Oceana said.

This is the first time the fishing activity and gap events near Argentina’s waters have been quantified, according to Marla Valentine, Oceana’s illegal fishing and transparency campaign manager.

Valentine said the amount of fishing – 900,000 hours over three years – was “astronomical for such a concentrated area” and underscored the need for transparency, as 600,000 hours of “dark” fishing could dump tons of illegally caught fish onto the global market.

“Fishing at this scale, under the radar, and without regard for laws and sustainability can have detrimental impacts on entire ecosystems, as well as the people and economies that depend on them,” Valentine said in a release.

‘It’s all connected’

Ecuador Galapagos China fishing protest
Ecuadoreans protest illegal fishing around the Galapagos Islands on August 14, 2017.

China’s heavily subsidized distant-water fishing fleet is the world’s largest. Its catches are hauled back to China and often sold for export.

China is not alone in distant-water fishing, but its fleets are frequently accused of fishing illegally and overfishing.

Indonesia, where officials described Chinese fishing as “transnational organized crime,” blew up at least one Chinese fishing boat. African countries have detained and fined Chinese vessels, and Ecuador jailed a Chinese crew caught with 300 tons of illegally caught fish.

Chile and Argentina have both had run-ins with Chinese fishing vessels. Argentina’s coast guard has chased, fired on, and sunk Chinese vessels it said were fishing illegally in Argentine waters.

The appearance of some 300 Chinese-flagged fishing boats near Ecuador in summer 2020 drew international attention, including from US authorities, who have warned about such activity for years.

During the period studied by Oceana, 30% of the Chinese vessels fishing around Argentina – and 21.7% of those that went “dark” – also fished near Ecuador, Valentine said.

Chinese fishing boat Galapagos Ecuador
Ecuadorian Navy vessels surround a fishing boat near the Galapagos Islands’ EEZ, in the Pacific Ocean, on August 7, 2020.

The US Coast Guard frequently conducts operations to counter illegal, unregulated, and unreported, or IUU, fishing. One such patrol in the South Atlantic this year was the first “in recent memory.”

The service also released a “strategic outlook” report on IUU fishing in September.

“It’s bigger than catching a few boats with illegal tuna. This is really about systemic violations of … sovereignty, economic security, [and] weakening of the global rules-base order,” Adm. Karl Schultz, commandant of the Coast Guard, said in September.

Along with concerns about ecological damage and forced labor, Chinese fishing has geopolitical dimensions, especially in Latin America. US officials are wary of China’s increasing presence there, including in extractive industries.

As in other regions, illegal fishing in Latin America is seen as destabilizing, Adm. Craig Faller, who oversees US military activity in the region as head of US Southern Command, told the House Armed Services Committee in April.

“Food security is national security for any nation, and when nations are losing their food stocks, their fishing, it’s impacting their life. It’s driving insecurity,” Faller said. “It’s all connected, and we play a role.”

Read the original article on Business Insider

Critics say a wealth tax wouldn’t work. Argentina just brought in $2.4 billion with one.

Congress in Buenos Aires, Argentina.
Congress in Buenos Aires, Argentina.

  • A one-off tax on Argentinian’s wealthiest brought in around $2.4 billion for pandemic recovery.
  • The measure was passed in December, as worldwide critics of wealth taxes said they weren’t feasible.
  • Critics say they’re difficult to implement, and the ultrawealthy will dodge them, but Argentina raised more than expected.
  • See more stories on Insider’s business page.

A one-off wealth tax on the wealthiest Argentinians brought in around $2.4 billion to help address pandemic costs, according to the Buenos Aires Times.

In December, Argentina’s Congress voted to pass a levy on those with assets over 200 million pesos, Insider’s Joshua Zitser reported. The measure passed by 42 to 26 votes, although it did see some intense political opposition. According to the BBC, the tax was only set to impact the top 0.8% of the population, and about 10,000 people ended up paying the tax, according to some early data. They saw a levy of up to 5.25% on their total assets.

Argentina’s wealthiest reportedly pushed back on the tax, with some moving to take legal action. Others procrastinated on paying; payments were due April 16, but the Buenos Aires Times reported that only 2% of taxpayers subject to the tax had paid up by early April.

The revenue raised will go toward areas impacted by the pandemic, like housing, scholarships, public health, and relief for small businesses. Overall, the amount that the taxes brought in comes to about 0.5% of the country’s GDP, according to the Buenos Aires Times. The newspaper reported this was a higher amount than expected.

As the subject of wealth taxes has gained steam internationally during the pandemic, critics have emerged, citing issues ranging from feasibility to even legality. Argentina’s example suggests their critiques could be wrong, and wealth taxes have viability.

One-off wealth taxes have emerged as a possible pandemic recovery solution

The International Monetary Fund has said that temporary taxes on the wealthy could help the global economy rebound from the coronavirus recession. That statement from the IMF marked a major shift from its own policies – and perhaps highlights the increased traction of one-off wealth taxes as a way to curb inequality and help economies rebound from pandemic devastation.

Experts in the UK also called for a one-off measure in December, saying it could bring in around 260 billion pounds. The Wealth Tax Commission was proposing a 1% tax on wealth over £500,000 for five years. One-off taxes do have some precedent in the UK, and potential taxes on wealth may still be looming across the pond.

On this side of the Atlantic, Sen. Elizabeth Warren has been an outspoken advocate for a straightforward wealth tax on Americans with a net worth of $50 million or more. Her proposal – which would be permanent – could bring in $1.4 trillion over 10 years. A majority of Americans support a wealth tax as a way to curb inequality.

Read more: Advisors to the wealthy are fielding a frenzy of calls from clients worried about estate planning and taxes. Here’s how they’re navigating the chaos.

One of the most prominent wealth-tax critics has been billionaire Leon Cooperman; he’s said that he doesn’t think a wealth tax is intelligent or legal. He’s also said the ultrawealthy would hide their assets. That’s an assertion that’s been echoed by inequality expert and Nobel Prize-winning economist Angus Deaton: He told Bloomberg that a wealth tax would be difficult to implement, and the wealthy would try to avoid it.

President Joe Biden seems to be opting for taxes that target the wealthy, but don’t necessarily constitute a wealth tax. He’s proposed, among other measures, raising the income tax rate for Americans making over $400,000, upping the tax rates on capital gains, and increasing the corporate tax rate.

“It’s time for corporate America and the wealthiest 1% of Americans to just begin to pay their fair share,” Biden said in his address to the joint session of Congress.

Read the original article on Business Insider

Taco night is going to get more expensive for Americans this summer as corn prices skyrocket

GettyImages 1062096604
  • Corn tortillas may be difficult to find this summer, as major corn producers struggle to meet demand.
  • Labor shortages and poor weather have decreased corn yields for major producers.
  • China is leading a surge in demand as it seeks to replenish its swine herd.
  • See more stories on Insider’s business page.

Taco shells will be in short supply this summer.

Corn tacos will be more difficult to find in grocery stores as demand for corn – a key product in anything from fuel to animal feed, as well as your favorite tacos – paired with supply-chain woes makes the product even more difficult to produce.

Demand for the grain has surged in recent months. Increased interest from China, as well as a combination of poor weather and labor shortages, has made the key crop an increasingly valuable commodity.

Major corn producers in Brazil and Argentina have been facing difficulty finding people to work the fields amid the COVID-19 pandemic, according to Axios. Major droughts in the countries responsible for 40% of the international corn market have also decimated crop yields, Reuters reported.

At the same time that supplies are down in major corn-producing countries, demand for the product commonly used in animal feed is spiking. China is leading the surge in demand, importing 40% more corn in 2021 than the last 60 years combined, according to an April report from the World Agricultural Supply and Demand Estimates.

The country is attempting to rebuild its swine herd after more than half of the nation’s herd was killed off by an outbreak of African swine fever in 2019, and corn feed is crucial to China’s plans to replenish it.

US farmers could see significant profit from the shortage, but unseasonably cold weather and droughts in the Midwest threatens to further diminish corn production, Axios reports.

Corn prices are at an 8-year high, rising 16% in April alone and 43.7% this year, according to MarketWatch.

Americans should “brace for higher prices” in the coming months on any corn-based products, including tortillas, senior market analyst at MOYA told USA Today.

“Corn, wheat, soybeans and even lumber prices are surging higher, and that should spell trouble in the coming months for the U.S. consumer,” Moya said.

The corn shortage is one of many food and household goods that Americans can expect to see in short supply on grocery shelves in the coming months. From surging gas prices to toilet paper and coffee shortages, the US is facing a supply-chain crisis.

Read the original article on Business Insider