Snapshot Web3

October 11, 2023

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Regulatory and Legal News

Brazil’s Congress puts Binance CEO CZ in crosshairs for indictment

A Brazilian congressional committee recommends indicting Binance CEO CZ and three local executives for alleged financial crimes related to pyramid schemes. The report accuses them of fraudulent practices and unapproved securities trading. The committee also suggests investigations into tax evasion, money laundering, and more. While these recommendations are not binding, they indicate increased regulatory scrutiny. Binance says it's committed to collaboration but rejects baseless accusations. This follows a global crackdown on Binance by regulators in several countries, including the U.S. and Australia.

Cyprus to tighten crypto regulations in accordance with FATF

Cyprus plans to tighten cryptocurrency regulations to comply with international anti-money laundering standards set by the Financial Action Task Force (FATF). Amendments to the Prevention and Suppression of Money Laundering and Terrorist Financing Law will require crypto service providers to register with the Cyprus Securities and Exchange Commission (CySEC) or face fines up to €350,000 or imprisonment. The move aims to align Cyprus with global AML/CFT standards. While some reservations were raised by the Cyprus Bar Association, crypto companies like eToro and Bybit have reported no major issues with registration in the country. Binance, however, withdrew from the Cyprus market in July.

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Innovation and Launches

Circle rolls out native USDC tokens on Polygon

Stablecoin issuer Circle has introduced native USD Coin (USDC) on the Ethereum layer-2 scaling protocol Polygon. This allows users and developers to access USDC without the need to bridge it from Ethereum to another blockchain. Circle's APIs and Circle Mint now support Polygon-based USDC, leveraging the protocol's scaling capabilities. The move enables faster, low-fee transactions for various purposes, including payments, remittances, trading, borrowing, and lending. Previously, users had to use bridged USDC from the Ethereum blockchain, which wasn't issued by Circle. This new offering can be redeemed 1:1 for US dollars.

Zimbabwe turns gold-backed digital token into payment method

On October 5, Zimbabwe officially launched its gold-backed digital token called Zimbabwe Gold (ZiG) as a payment method. The Reserve Bank of Zimbabwe (RBZ) introduced this project in April, with each token backed by a physical amount of gold held in the bank’s reserves. The aim is to encourage local investors to invest in national assets rather than United States dollars. ZiG can be stored in e-gold wallets or e-gold cards and used for peer-to-peer and business transactions. The RBZ reported different price levels based on the weight of the gold reserve, making it accessible to various investors.

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NFT, Gaming and Metaverse

NFTs are here to stay — just not as we once knew them

NFTs, which gained immense popularity in 2021, have undergone a transformation. While the market for picture-for-profile (PFP) NFTs has slowed, their value has evolved beyond price. NFTs now extend to tokenizing real-world assets and offering exclusive experiences. For instance, the European Commission is using digital product passports to provide environmental data on textiles, representing a form of digital asset with a similar concept. Mainstream and luxury brands are also embracing NFT technology to engage consumers, with companies like ASICS and Nike using NFTs for loyalty programs and rewards. This shift towards utility over speculation may drive the next wave of NFT adoption in Web3.

U.K. Group Calls for NFT Copyright Infringement Safeguards and Code of Conduct

A U.K. committee is urging the government to collaborate with NFT marketplaces to tackle copyright infringement and establish a code of conduct to safeguard creators. Copyright issues arise when NFTs are generated from creative works without proper authorization. The committee expressed concerns about football clubs releasing tokens tied to membership benefits, citing potential financial risks for fans and potential damage to club reputations. Additionally, the committee called on NFT promoters to assume responsibility for consumer protection. They initiated an inquiry into NFTs in November to address these issues and others surrounding the NFT space.

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Scams and Hacks

Galxe replacing 110% of funds users lost in recent front-end hack, over $400K

Galxe, a self-sovereign identity platform, is compensating users who suffered losses in a recent hack by 110%. The affected users will receive their funds in Tether (USDT) to their original wallet addresses. The attack impacted about 1,120 users, resulting in a preliminary loss estimate of over $396,000. Galxe is working with security firms to recover the funds and has strengthened security measures. The incident was primarily caused by a domain registrar resetting Galxe's account information without proper authorization.

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Interesting Reads

Bitcoin Lightning Network growth jumps 1,200% in 2 years

Bitcoin's Lightning Network has experienced remarkable growth, with routed transactions increasing by an estimated 1,212% in the past two years. In August 2023, around 6.6 million routed transactions were recorded, compared to 503,000 in the same month in 2021. This surge is significant even in the face of a 44% decrease in Bitcoin's price and reduced online search interest. The data also indicates that Lightning now processes at least 47% of Bitcoin's on-chain transactions, suggesting its increasing role as a medium of exchange. The average Lightning transaction size in August 2023 was approximately $11.84.

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Quick Links

Binance freezes Hamas-linked accounts after Israeli request

The freeze does not affect Binance accounts owned by ordinary Palestinian civilians.

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Miscellaneous

The economy is surging — which means it might be time to start buying Bitcoin

The U.S. economy is showing resilience with a significant job growth despite rising yields and mortgage rates. This may signal a potential end to the historic bond market sell-off, potentially starting a new bull market for risk assets. In the crypto space, regulatory decisions, especially regarding a Bitcoin spot ETF, are impacting short-term Bitcoin prices. A positive decision could lead to substantial Bitcoin inflows. If the Federal Reserve hints at a pause in rate hikes, it could trigger a major risk-on rally across various assets, including crypto. The prospect of a BTC "halvening" in April 2024 and potential regulatory clarity suggest a positive outlook for the crypto market, despite challenges.

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The information provided in this newsletter is for informational purposes only and should not be interpreted as investment advice, endorsement, or recommendation. Cryptocurrency investments carry significant risk due to their volatility. You should consider your financial situation, investment goals, and risk tolerance before making any investments. We strongly recommend consulting a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.