Legal Currency & Pump and Dump

Two interesting crypto currency news items appeared in my news feed this morning. First was news that the central American country of El Salvador has formally adopted bitcoin as legal tender. Next was news that the U.K. Financial Conduct Authority (FCA) warned about the risks offered by “speculative crypto tokens are not regulated by the FCA and consumers are not covered or protected by the Financial Services Compensation Scheme in the event of losses.”.

The news about El Salvador reported that the countries treasury purchased 400 bitcoin valued at approximately 20.9 million dollars at the time of the purchase. The same reporting notes that the value of bitcoin rose after that purchase. The government has issued a crypto currency wallet called Chivo. El Salvadoran citizens and businesses using the government issued Chivo wallet will receive $30. Based on bitcoin valuation on September 7, 2021 when the local law went into effect the government would need almost $200 million in bitcoin to fulfill that $30 offer to all of its citizens. I found the reporting about the countries use of crypto currency interesting in that users can pay in bitcoin and the payee can receive that payment in dollars; with the government handling the currency exchange.

Update: Crypto platform Bitso working with El Salvador on Chivo digital wallet via Yahoo!

Pump and dump schemes have been around for years and used too often to draw investors into an investment by parties that are seeking to run up the value of their investment in order to profit when they exit. Those investments could be anything of any value from commodities like gold and silver to stocks and currencies even to collectibles such as Matchbox cars. With the rapid growth of both crypto currencies and social media it’s hard to distinguish enthusiasm from attempts to influence others for profit. The FCA news is based on a talk by an FCA official that specifically points this out as a person with a large social media following (Kim Kardashian) asked her 250 million followers to speculate on crypto tokens by promoting an advert for Ethereum Max (Ethereum Max is not Ethereum). The article goes on to further point out that Ethereum Max is a speculative digital token created a month before by unknown developers.

Update: Platforms like Facebook (FB), Twitter (TWTR) and TikTok, need to “step up.” More colorful commentary via CNN.