🔮 ETFs Are Here, Celsius Sells Eth, EU Stress Tests, Visa Web3 Loyalty, Ordinals Scare

Token Specific News

A Better Saga Than Twilight: ETFs

11 spot Bitcoin ETFs were approved in the U.S., marking a significant development for the crypto market. The ETFs – including BlackRock's iShares Bitcoin Trust (IBIT.O), Grayscale Bitcoin Trust (GBTC.P), and ARK 21Shares Bitcoin ETF (ARKB.Z) – began trading Thursday morning, recording substantial activity, with volumes exceeding $4.5 billion. The approval is expected to have profound implications for U.S. investors, as it enables them to hold cryptocurrency within their brokerage accounts, offering increased accessibility to the asset class. Further, the new ETFs pave the way for a host of new institutional investors including pension funds and registered investment adviser (RIA) vehicles to allocate to digital assets. Analysis suggests the new ETF products could see significant inflows, primarily driven by these wealth management channels that could not previously access safe and efficient Bitcoin exposure at scale. This positive market sentiment was reflected in sustained gains of Bitcoin and Ether following the ETF approval.

Source: Galaxy

Surge in Inscription Protocols Wanes Across Ethereum-Compatible Networks

The intense activity around inscription protocols, initially seen on Ethereum-compatible networks, has diminished in recent weeks. Data from Dune Analytics indicates that while inscriptions still dominate on platforms like Avalanche and Ethereum's Goerli testnet, their prevalence has decreased on leading Layer 2 networks, Polygon PoS sidechain, and BNB Chain. Inscriptions constituted a significant percentage of transactions on these networks initially but have seen a decline in recent days. The surge in inscription activity, driven by the creation of pseudo-NFTs on Bitcoin, has experienced reduced transaction fees and network participation. Despite the initial fervor, challenges like lack of EVM compatibility and limited utility in DeFi beyond speculation have contributed to the decline.

UniSat’s Bitcoin Ordinals Update Sparks Controversy and Fork Concerns

UniSat's planned update of the Bitcoin Ordinals protocol faces criticism from BRC-20 standard creator Domo, who deems it unsafe and effectively a fork of the BRC-20 protocol. UniSat's Ordinals Jubilee upgrade, aimed at freeing Ordinals from historical burdens, is met with skepticism as it lacks testing, may lead to bugs, and grants excessive control to the company. UniSat defends its move, emphasizing the long-term benefits and enhanced foundation for BRC-20 development. The Layer 1 Foundation, a non-profit ensuring BRC-20 standard remains decentralized, disputes UniSat's approach, deepening the divide within the BRC-20 community. Similarly, Bitcoin is emerging as a formidable competitor in the NFT space, outpacing Ethereum and Solana in daily transaction volume. In December 2023, Bitcoin recorded a remarkable sales volume of $881 million. The surge is notably driven by "Inscriptions," with BRC-20s playing a pivotal role in the overall activity within the Inscription market.

Source: Messari

Decentralized Exchanges (DEXs) Face Mixed Fortunes in 2023 Despite Early Promise

The anticipated rise of Decentralized Exchanges (DEXs) in 2023, hailed as the year for DEXs, faced mixed outcomes. Initial successes included DEXs efficiently handling depegging stablecoins and quickly listing memecoins during the memecoin mania in March and May, respectively. However, recent data shows that DEXs have not capitalized on the broader surge in trading seen in December. Despite a slight month-over-month increase in volumes, DEXs still lag behind their performance in March. The DEX to Centralized Exchange (CEX) spot volume ratio, which hit an all-time high in May, has been on a decline. The limited representation of Bitcoin, a significant driver of bullish narratives, on DEXs might be a contributing factor, as DEXs are primarily on smart contract-based layer 1s. Investors, particularly interested in Bitcoin, are opting for centralized exchanges or platforms offering the real asset rather than wrapped Bitcoin assets traded on DEXs.

Source: The Block

Visa Launches Web3 Loyalty Engagement Solution to Transform Customer Reward Programs

Visa has partnered with Web3 engagement platform SmartMedia Technologies to introduce the Visa Web3 Loyalty Engagement Solution. This solution aims to redefine customer loyalty programs by allowing brands to create gamified experiences, enabling consumers to earn points through interactive activities. These points can be redeemed for virtual, digital, or real-world experiences in various sectors. Web3 loyalty programs, incorporating elements like NFTs and crypto rewards, are gaining popularity, with brands like Gap, Clinique, Starbucks, and FamilyMart exploring or implementing such initiatives to enhance customer engagement and build lasting brand loyalty.

Regulation

Binance Flags 10 Cryptos, Including Monero and Zcash, for Increased Monitoring and Potential Delisting

Binance, a major cryptocurrency exchange, has identified 10 digital assets, including privacy-focused assets like Monero and Zcash, for heightened monitoring due to increased volatility and associated risks. The exchange cautioned users that these flagged assets, also encompassing ANT, FIRO, KP3R, MDX, MOB, REEF, VAI, and ZEN, may not meet future listing criteria and could potentially face delisting. In response to regulatory pressures and Binance's Department of Justice settlement, privacy coins like FIRO have come under monitoring tags. Binance requires users to pass quizzes every 90 days to continue trading these monitored tokens, reflecting efforts to balance compliance with privacy considerations in ongoing discussions.

Coinbase Offers Assistance to SEC for Improved Social Media Security After Breach

Following a breach that led to a false spot Bitcoin ETF approval post on a social media account associated with the SEC, Coinbase executives, including Chief Security Officer Philip Martin and Chief Legal Officer Paul Grewal, publicly offered to assist the SEC in enhancing its social media security. The fake tweets from the SEC’s Twitter/X account caused nearly $90 million worth of bitcoin long and short positions to be liquidated. The SEC is currently working with law enforcement to investigate the breach, which involved the compromise of a phone number associated with the account lacking two-factor authentication. U.S. Senators J.D. Vance and Thom Tillis have requested clarification from SEC Chair Gary Gensler on the security breach, considering it "unacceptable."

El Salvador Sees $12.6 Million Unrealized Profits on Bitcoin Investment

After being in the red for two years, El Salvador is now sitting on $12.6 million in unrealized profits from its Bitcoin investment. The country began purchasing Bitcoin in September 2021 and currently holds a total of 2,798 Bitcoin, equivalent to $131.3 million. President Nayib Bukele celebrated the investment turning a profit last month. The surge in Bitcoin's value by 75% since October, driven partly by expectations of the approval of a spot Bitcoin ETF in the U.S., contributed to El Salvador's positive investment outcome. The Securities and Exchange Commission (SEC) is anticipated to announce its decision on the Bitcoin ETF this week.

Celsius Unstaking ETH Holdings Amid Restructuring, Potentially Boosting Token's Prospects

Celsius, undergoing bankruptcy-related restructuring, has announced its decision to unstake its holdings of ETH. The move is expected to eliminate a factor that may have contributed to ETH's recent underperformance impacting Ethereum's consensus layer, the Beacon Chain. The Ethereum validator exit queue has reached a record high of 16,283 validators, taking around five and a half days to clear. Celsius, transitioning into a bitcoin mining company, had initially included staking in its activities but is now unstaking ETH to offset costs associated with the restructuring process. The unstaking activity is anticipated to unlock ETH for timely distributions to creditors. This development could positively impact ETH prices in the coming weeks, providing a potential boost after the removal of the staking-related factor affecting its performance.

Source: Validator Queue

EU Plans Comprehensive Stress Test, Analyzing Impact of Non-Bank Financial Institutions on Traditional Lenders

Following the passage of the Markets in Crypto Act (MiCA) in April 2023, the EU is set to conduct a comprehensive stress test on its banks, including the assessment of non-bank financial institutions (NBFIs), such as crypto entities. The European Banking Authority (EBA), in collaboration with the European Systemic Risk Board (ESRB) and the Financial Stability Board, aims to understand the real-world impact of adverse market developments on traditional lenders caused by NBFIs. This move follows previous actions by the EBA, including draft rules for stress testing stablecoin issuers and proposals for vetting individuals with significant stakes in crypto companies for sanctions or convictions. The summaries of the stress tests will be made public on the EBA website upon completion.

Other Domestic Regulation Updates

• Who’s affected by new crypto tax reporting obligations in the US?
• Supreme Court Justice Ponders Impact of AI on Law
• Gary Gensler says SEC’s X account has been compromised, posts fake bitcoin ETF approval news
• SEC wants court to consider Terraform ruling in Binance case
• Report Crypto Trades Over $10K to IRS or Face Jail? It’s Complicated
• Jane Street named as authorized participant by all 11 bitcoin ETF hopefuls
• Crypto Regulations Tightened in 80% of Major Jurisdictions in 2023

Other International Regulation Updates

• Anthropic Says It Won’t Use Your Private Data to Train Its AI
• DCG repays all short-term loans to Genesis
• Japan’s e-commerce giant Mercari plans to accept BTC payments: report

Pain & Gain

Pain

• Radiant Capital reportedly hacked for $4.5 million worth of ETH
• Gamma Strategies suffers estimated $3.4 million exploit
• North Korean hackers Lazarus Group moved $1.2 million worth of crypto from a coin mixer to a holding wallet

Gain

• Solana's MixMob Launches 'Race-to-Earn' Game Ahead of Airdrop, Saga Phone Perks
• Midjourney Leaps into AI Video Creation
• PayPal stablecoin deployment on Aave sought by Paxos
• PayPal's dollar-backed stablecoin PYUSD's use is gathering traction in DeFi. The third largest liquidity pool on Curve is the recently launched FRAXPYUSD pool, which boasts $135 million total value locked putting it just behind the popular 3pool.