Bitcoin, ethereum rise as Venezuela launches digital currency

·2 min read
An advertisement for Bitcoin and cryptocurrencies. Photo: Reuters
An advertisement for bitcoin and cryptocurrencies. Photo: Reuters

Cryptocurrencies were broadly higher on Friday morning, ending a volatile week on a high note, as Venezuela's government-backed digital currency kicks into gear and the US Federal Reserve chair said he has no intentions of banning crypto.

Bitcoin (BTC-USD) was up roughly 3% to trade at $44,537 (£33,108) while Ethereum (ETH-USD) the world's second largest crypto by market cap was up 2.3% to trade at $3,074.

Venezuela had announced in August that it is revamping its national currency, the bolivar and launching its central bank digital currency (CBDC) — the digital bolivar – on 1 October.

The digital bolivar will use an SMS-based exchange system to facilitate payments and transfers between users.

Some analysts believe the CBDC could be a temporary solution for the country, which is facing hyperinflation.

Bitcoin was up on Friday morning Chart: Yahoo Finance UK
Bitcoin was up on Friday morning Chart: Yahoo Finance UK

In the US, Fed chairman Jerome Powell was asked if he planned “ban or limit the use of cryptocurrencies.” Powell’s answer was a resounding “no.”

When asked about stablecoins, Powell said “they’re to some extent outside the regulatory perimeter, and it’s appropriate that they be regulated."

"A large section of investors are shifting their interest towards stable coins and other crypto-assets which are derived with more tactical procedures," Kunal Sawhney, CEO at equities research firm Kalkine Group, told Yahoo Finance UK.

The chair of the Securities and Exchange Commission (SEC), Gary Gensler, said that a bitcoin exchange-traded fund, based on Chicago Mercantile Exchange traded bitcoin futures, would have "significant investor protection" due to the Investments Company Act of 1940. He also said the SEC is reviewing numerous ETF filings for bitcoin.

Wael Makarem, senior market strategist at trading broker Exness said this "provided a clear support for the investors sentiment."

"The major cryptocurrencies are on their way to trim last week's losses. Laws that would provide decent protection to investors could also boost global adoption for crypto," he added.

Read more: How a bitcoin court case in Japan may create crypto millionaires

Meanwhile Visa (V) announced it’s ready to move forward with a blockchain interoperability platform that will link fiat money, CBDCs, stablecoins, and traditional blockchain currencies like bitcoin and ether in a solution called the Universal Payment Channel.

“Executing such projects is more than just a technical matter. In fact, one might argue that navigating the global regulatory challenges is far more difficult than the coding itself,” said Mati Greenspan, CEO of Quantum Economics.

Watch: What are the risks of investing in cryptocurrency?

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