Welcome to the latest edition of our newsletter, where we cover the highlights of the past week in the rapidly evolving world of blockchain and decentralized technologies.
(As of 2:30 PM Singapore Time, December 29, 2023)
This week in the industry, countries across 3 different continents made movements in crypto regulations. A U.S. federal judge, Jed Rakoff of the Southern District of New York, delivered a pivotal ruling against Terraform Labs, the entity behind the Terra and Luna cryptocurrencies. The judge declared that Terraform Labs violated federal securities laws by failing to register LUNA and MIR, another currency within the Terra ecosystem, as securities. This summary judgment, which could shape the course of an eventual trial over Terraform’s securities violations, highlights the ongoing regulatory challenges within the cryptocurrency market as traders consider how this ruling might come to impact future US decisions for other cryptocurrencies.
The cryptocurrency market this week observed notable fluctuations, with Bitcoin reaching a peak of $43.4K and Ethereum climbing over $2.4K. These highs, influenced by MicroStrategy’s significant Bitcoin acquisition, were short-lived as both currencies experienced downturns in the last 24 hours, with Bitcoin at $42K and Ethereum at $2.3K. This recent downswing can be partially attributed to the aforementioned legal development in the United States.
Globally, regulatory developments continue to shape the crypto landscape. Nigeria’s Central Bank has reversed its ban on crypto-related bank accounts, leading to renewed optimism in the sector. South Korea’s recent legislation mandates public disclosure of crypto holdings by public officials, advancing transparency in the region. In Hong Kong, proposed regulations for fiat-backed stablecoin issuers, including mandatory licensing and a regulatory sandbox, reflect a commitment to establishing a regulated crypto hub.
These regulatory moves, combined with the recent court ruling in the U.S., suggest an evolving landscape where legal and regulatory compliance will play a crucial role in the growth and stability of the crypto market. Investors and participants in the crypto space are advised to stay informed and adapt to these changes as they continue to unfold.
For more comprehensive analyses and in-depth insights into the latest market movements, visit the BTSE blog for regular updates.
- Bitcoin Mining Stocks Surge Ahead of ETF Anticipation: On December 27, investor interest in Bitcoin-related stocks soared, with eight of the top thirty-five traded stocks being related to Bitcoin mining. This surge was driven by the anticipation of an imminent spot Bitcoin ETF approval. Notably, Marathon led with a 15.24% increase in shares, topping trading volumes even beyond Tesla. Other companies like Bitfarms, TeraWulf, Riot Blockchain, Bit Digital, CleanSpark, Canaan, and Cipher Mining also saw significant gains and trading volumes, reflecting a broader market interest in Bitcoin and expectations for high returns from mining companies, especially with upcoming halving in 2024.
- Vitalik Buterin’s Vision to Revitalize Ethereum’s Cypherpunk Roots: Ethereum co-founder Vitalik Buterin advocates for a return to Ethereum’s original “cypherpunk” vision, emphasizing decentralization, open participation, censorship resistance, and credible neutrality. He observes that Ethereum’s early ethos of being a “public decentralized shared hard drive” with peer-to-peer messaging and decentralized file storage has been overshadowed by financialization since 2017. Buterin highlights recent advancements like rollups and second-generation privacy solutions as means to reinforce these values. He also stresses the importance of resisting centralization to preserve the unique value of the crypto ecosystem.
- Blast’s Momentum in Ethereum Layer-2 and Controversial Airdrop Strategy: Blast, an upcoming Ethereum layer-2 scaling network, has accumulated over $1.1 billion in deposits, offering a yield of about 4% on Ethereum and 5% on stablecoins. The network, yet to be launched, has garnered attention with its BLAST token airdrop planned for May 2024. Despite controversy around its pre-launch bridge and marketing strategies, Blast, backed by Paradigm and also associated with the successful NFT marketplace Blur, continues to attract significant user interest and investment.
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- Argentina’s New Crypto Legislation: A Tax Incentive Approach: Argentina’s newly elected President Javier Milei has proposed a draft bill offering incentives for citizens to declare both domestic and foreign cryptocurrency holdings. The bill aims to regularize these assets by offering a favorable tax rate, legalizing their use regardless of origin. Early declarers could benefit from a low 5% tax rate, increasing over time. This move, part of a broader economic reform, addresses Argentina’s long-standing economic challenges and seeks to tap into unregulated assets held by citizens. The bill, however, is facing significant public backlash shortly after its introduction.
- Record Highs in Bitcoin Options Trading Volume as Year Ends: Bitcoin options trading volume has reached an all-time high, with over $38 billion traded across major cryptocurrency derivatives exchanges. This surge culminated in a record $7.7 billion worth of Bitcoin-linked options set to expire on Deribit. The majority of these contracts are call options, indicating a bullish market sentiment. The Chicago Mercantile Exchange also saw its highest-ever monthly bitcoin options trading volume, further highlighting increased activity and optimism in the cryptocurrency derivatives market.
- Hong Kong’s Forthcoming Regulatory Regime for Stablecoin Issuers: The Hong Kong Monetary Authority (HKMA) is finalizing a regulatory framework for stablecoin issuers. A consultation paper released for public comment outlines that issuers must be fully backed and regularly disclose reserve assets. The regulations aim to address potential risks to financial stability and consumer protection, reinforcing Hong Kong’s commitment to fostering virtual asset innovations while managing risks related to money laundering and terrorist financing. This initiative is part of Hong Kong’s broader efforts to establish itself as a global hub for crypto activities.
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Note: BTSE Blog contents are intended solely to provide varying insights and perspectives. Unless otherwise noted, they do not represent the views of BTSE and should in no way be treated as investment advice. Markets are volatile, and trading brings rewards and risks. Trade with caution.