The Salary Calculator

The current state of crypto

by Madaline Dunn

Crypto is in a constant state of flux. In 2022 we witnessed the infamous crypto-crash, it’s now in the midst of regulatory changes, and two of the biggest crypto companies are currently facing lawsuits. With so much confusion and incoming crackdowns, it makes sense that you might be having questions about what’s happening and how the crypto landscape is changing.

This week, at The Salary Calculator, we’ll walk you through:

• How the current crypto market is faring,
• Legislative changes and regulated crypto activity
• What’s happening with Britcoin
• How to stay as safe as possible when trading

How is crypto faring?

There are currently 23,171 cryptocurrency projects in the crypto market amounting to £954 billion, with the leading three being Bitcoin (BTC), Ethereum (ETH), and Tether (USDT). The former is the original cryptocurrency and the world’s largest, with a 1 Bitcoin worth £24,019.77, up from £18,929 in August last year. However, as highlighted, despite this, the crash saw it fall from its all-time high of £69,000 the year prior to this much lower figure.

Ethereum, similarly, has fallen meteorically; last year in May, the cryptocurrency fell over 20 per cent in 24 hours – at the end of June, it was worth £1,481, with a market cap of £178.1 billion.

Tether, meanwhile, lost USD 20 billion in 2022, but according to the latest reports, it has now recovered this, surpassing USD 83.2 billion in market capitalisation.

However, for the most part, trust has not been restored in crypto, and experts say that the road to recovery will be long. Indeed, considering the continued volatility of the currency, experts say that if you choose to invest in crypto, keep investment minimal and only weigh in money that you can afford to lose. It’s likely last year you will have seen stories of investors losing their entire life savings after betting on crypto – and it’s important to remember that even the most tech-savvy individuals are at risk of losing money, because the market is extremely speculative.

Legislative changes regulating activity and risk

There have been lots of regulatory shifts related to crypto in recent years, and just recently, the UK parliament moved one step further to recognising crypto as a regulated activity in the UK, voting the Financial Services and Markets Bill (FSMB) through to the House of Lords (HoL).

The legislation contains provisions to:

• Include stablecoins under the country’s payments rules,
• Include crypto as a regulated activity, and
• Supervise crypto promotions.

According to reports, new regulations could be introduced within 12 months.

Further to this, the FCA has also introduced new rules for marketing cryptoassets, whereby financial promotions on cryptoassets will only be permitted if they are “made or approved” by a firm with certain status with the FCA2. Further, if a firm promotes crypto, it must have clear risk warnings so that adverts are “clear, fair and not misleading.

There were a huge amount of hacks on crypto in 2022, whereby hackers stole a record $3.8 billion worth of cryptocurrency globally last year; 2022 was subsequently identified as the biggest ever year for hacking. And, indeed, this should be a warning to consumers who should be aware that crypto is still an environmental that comes with serious risk.

Speaking about the potential risk that consumers expose themselves to when dealing with crypto, Sheldon Mills, Executive Director, Consumers and Competition, said: “It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice.”

Further, Mills said that consumers should “still be aware” that crypto remains largely unregulated and high risk, and that those who invest should be prepared to “lose all their money.”

Interestingly, despite this ongoing warning, last year, the FCA found that almost one in 10 people surveyed owned cryptocurrencies in 2022.

Further, the International Monetary Fund (IMF) has even recently gone back on its advice that countries should ban crypto, and is now saying that outright bans “may not be effective in the long run.”

Is Britcoin advancing?

There’s been a lot of hype around Britcoin; some have said it will bring legitimacy to crypto, while others have criticised the proposal to introduce the digital currency, claiming that it will be detrimental to the UK economy and people’s privacy.

The House of Lords Economic Affairs Committee, for example, found that the introduction would see “a lot of risk” with “very little” reward. Further, it outlined that if Britcoin allowed anonymous transactions, it would be open to the same kind of criminal risks as the current cryptocurrencies, but if it introduced potential ‘safeguards ‘against this, privacy would be at risk. Indeed, a centralised digital pound would mean that all spending would be recorded.

Regardless of the criticisms, it appears that Britcoin is pushing ahead and projections are that it could arrive by the end of the decade. Indeed, Project Rosalind, a joint trial run by The Bank for International Settlements and the Bank of England, was trialling the best way an Application Programming Interface (API) could be implemented in central bank digital currency (CBDC) for retail transactions. This trial recently concluded, with it reportedly showing the potential CBDCs have for introducing “programmability” to money and it looks like things will be progressing further.

Things to bear in mind when trading

While it’s important to enter trading with the knowledge that it is inherently risky, some of the following tips can help you trade a little more safely and is advise that should always apply to cryptotrading.

1.) Research is always your friend. Whether you’re looking for a cryptocurrency exchange to trade on or deciding which cryptocurrency you’ll proceed with – you need to research in depth. Make sure to choose an exchange with high-security features. Likewise, with cryptocurrency itself, review reputation, risk and track record.

2.) As outlined above, crypto is prone to being hacked, so you need to keep your money secure. One of the best ways to do this is to use a crypto wallet. Here, either get a digital wallet on your computer’s hard drive or a physical hardware wallet. This is also key for ensuring you don’t misplace your crypto – as many as 1 in 5 Bitcoins have been misplaced.

3.) Get serious about security. Say goodbye to easy-to-guess passwords and use a password manager to help you store your highly-secure passwords.

Tags: Britcoin, cryptoassets, cryptocurrency, investment

Government plans to regulate crypto for greater consumer protection

by Madaline Dunn

Crypto can feel like a bit of a minefield at the best of times, it is undoubtedly volatile, and currently, comes with fewer legal protections. However, as governments increasingly look to capitalise on the cryptomarket, and a number of high-profile hacks, regulation is on the way. This was first seen in the Financial Services and Markets Bill (FS&M Bill), and its latest proposals concerning the regulation of cryptoassets.

At The Salary Calculator, we know how challenging it can be to navigate the ins and outs of crypto and if you’re thinking of dipping your toe in as a potential investment opportunity, you’ll likely want to know where you stand from a regulatory point of view. Below, we’ll walk you through:

• The current risks associated with crypto
• The government’s regulatory plans and what they’ll involve
• How you’ll be affected as a consumer and how to keep safe when trading

Current risks associated with crypto

Crypto is known for being elusive, and volatile. According to research by the All-America Economic survey, only 8% of Americans have a positive perception of cryptocurrency. It’s only slightly better in the UK, too, with 15% thinking positively about crypto.

It’s no wonder there’s such a bad perception of the currency, either: it’s a big energy sucker, not VERY environmentally friendly, people often make losses trading (three-quarters have likely lost money on their investments in cryptocurrencies) and billions have been stolen in recent years.

Recent research by Chainalysis found that 2022 was the biggest ever year for crypto hacking, with around $3.8 billion stolen. Speaking about this, Kimberly Grauer, director of research at Chainalysis, said: “This year we saw some really big attacks that accounted for a lot of the value hacked. We saw a lot of advancements in the Web3 space – that introduced large new vulnerabilities that expert hacking organisations exploited.”

The EU has already outlined the world’s first comprehensive set of rules, due for final approval shortly, and to be introduced by next year. The UK is now following the EU’s example.

Plans for increased safety

To battle against the fraud and theft that is rife in the cryptomarket, the UK government has set out plans to bring in tighter regulation. According to the Treasury, this regulation is pegged to “protect consumers” without “stifling the potential economic benefits” of the crypto industry. This comes after criticisms that crypto is, at present, a “wild-west.”

So, what will the regulation actually do? Well, according to the government it is going to bring regulation of a broad suite of cryptoasset activities in line with its approach to traditional finance.

The government has outlined in its consultation for the proposals:

• It will create rules on crypto-asset promotions which are “fair, clear and not misleading,”
• Boost data-reporting requirements, including with regulators,
• Introduce new regulations to prevent “pump and dump,” which involves people artificially inflating the value of a crypto asset before selling it.

In a statement, Andrew Griffith, economic secretary to the Treasury, said: “We remain steadfast in our commitment to grow the economy and enable technological change and innovation – and this includes cryptoasset technology. But we must also protect consumers who are embracing this new technology, ensuring robust, transparent and fair standards.”

How the changes could affect you and how to keep safe when trading

According to research, 2.3 million people in the UK own some form of crypto asset, which means that there’s a whole host of people that could be affected by the regulation proposals currently open to consultation.

There are a few key things to note and below we’ll go into a little more detail:

• The government is discussing an issuance and disclosure regime, which will seek to provide appropriate liability and compensation for untrue or misleading statements, as well as minimum standards of information around issuance and investor protections regarding marketing materials,
• Regarding exchanges, the government is exploring “transparent and fair access and operating rules,” with systems and processes for ensuring accurate market data in real-time,
• It is proposing a dedicated regime to detect and tackle market abuse in digital asset markets (spoofing and layering, pump and dumps, wash trading, etc.),
• With regard to lending programs, the government outlined there should be: adequate risk warnings for consumers; adequate liquidity and wind-down arrangements; clear contractual terms for ownership and, ringfence retail funds in the event of insolvency.

Further to this, on Monday 6th February, the Government published a policy statement on its approach to cryptoasset financial promotions regulation. This outlined that cryptoasset promotions to UK consumers, will have to be clear and fair, and offer customers a 24-hour cooling-off period.

Speaking about the proposals, Jason Guthrie, European head of digital assets at the financial firm, Wisdom Tree, said looking forward, the “devil would be in the detail” with the right regulation in the interests of the industry and customers. “Having a solid a regulatory framework, having enforcement capabilities, is really important for consumer confidence. The sooner we have details around concrete proposals, the easier it is to plan for and build towards,” he said.

The proposals would largely see more security around investment, however the consultation on the proposals will run until April 2023, and safeguards will not be introduced for quite some time. Even when they are introduced, they still won’t eradicate all the risks associated with trading. Until then, to ensure you safeguard yourself, take the following steps to make investing safer:

• Be sure to use a trusted crypto platform and make sure to carefully read your exchange’s user terms and agreements. This will assist you with finding out where your funds are stored and what will happen if an exchange goes bankrupt.
• Enable two-factor authentication so that you’re provided with an additional layer of security.
• Avoid Public Wi-Fi Networks, unless you have a VPN. This is because public Wi-Fi networks are vulnerable to hackers and allow them to spread malware.

Tags: cryptoassets, cryptocurrency, Economy, UK