Snapshot Web3

October 16, 2023

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Regulatory and Legal News

Australian crypto exchanges look to new licensing regime with cautious optimism

Australian crypto exchanges applaud the Treasury's plan to regulate them under existing financial service licenses. The proposed regulations aim for industry growth, regulatory certainty, and consumer protection. Industry leaders view this positively, though some, like Jonathon Miller of Kraken Australia, worry it might confine crypto within traditional finance frameworks. Despite concerns, there's consensus on the importance of regulatory clarity for crypto companies in Australia. Liam Hennessy from Clyde & Co sees the proposal as a step towards aligning with efforts in jurisdictions like the EU to regulate crypto, stressing the need for local exchanges to prepare for licensing.

California Gov. Newsom greenlights crypto regulation bill for 2025

California Governor Gavin Newsom has endorsed a cryptocurrency bill that will impose stricter regulations on crypto-related businesses, slated to take effect from July 2025. The bill, named the Digital Financial Assets Law, mandates individuals and firms to obtain a Department of Financial Protection and Innovation (DFPI) license for digital asset activities. It empowers the DFPI to enforce rigorous audit and record-keeping requirements on crypto firms, with penalties for non-compliance. Newsom had previously rejected a similar bill in 2022, citing concerns about its adaptability to rapidly evolving crypto trends, and indicated a preference for federal regulations before initiating state-level licensing initiatives.

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Innovation and Launches

Ferrari to accept crypto payments in the US

Ferrari will soon accept cryptocurrency payments for its high-end sports cars in the United States and plans to extend this option to Europe. The decision comes in response to customer demand and dealer requests, particularly from young, crypto-savvy investors. The luxury automaker, fully booked with orders until 2025, aims to tap into this expanding market and reach a wider customer base. In partnership with BitPay, Ferrari will enable transactions in Bitcoin, Ether, and USD Coin, with no additional fees for customers. BitPay will swiftly convert crypto payments to fiat currency, safeguarding dealers from price fluctuations. This move follows Tesla's earlier foray into crypto payments.

Madeira announces creation of Bitcoin business hub for innovation

The President of Madeira, Miguel Albuquerque, announced the creation of a Bitcoin business hub at Bitcoin Amsterdam 2023. This hub aims to drive regional innovation and collaboration, shifting Madeira's economic focus towards technology, high-tech industries, artificial intelligence, and Bitcoin. Madeira has already implemented policies exempting Bitcoin investors from personal income taxes. Prince Filip of Serbia praised Madeira's forward-looking approach, likening Bitcoin to the secure, open protocol of the internet. This move aligns with Albuquerque's belief in Bitcoin's positive impact on the region's economy.

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NFT, Gaming and Metaverse

Microsoft’s Activision buy may see more metaverse in the office and crypto in gaming

Microsoft's acquisition of Activision Blizzard in 2022 is expected to have a bigger impact on business communications than gaming. CEO Satya Nadella emphasizes metaverse development for work-related applications. Microsoft's metaverse platform, Mesh, complements Teams. Gaming CEO Phil Spencer is cautious about the metaverse concept. Leaked documents hint at plans to integrate crypto wallets into Xbox, potentially affecting gaming offerings. Activision CEO Bobby Kotick envisions a convergence of virtual worlds and reality.

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Scams and Hacks

EtherHiding: Hackers create novel way to hide malicious code in blockchains

Cybercriminals are using a method called "EtherHiding" to hide malicious code in Binance Smart Chain contracts, spreading malware through fake browser updates. This technique involves injecting code into compromised WordPress sites to retrieve payloads from blockchain contracts. Attackers then hide these payloads in BSC contracts, acting as anonymous hosting platforms. This allows for constant code updates, making mitigation challenging. Guardio urges heightened security practices for WordPress sites, which are vulnerable entry points for such threats. They emphasize the need for adaptive defenses in the face of these emerging risks in Web3 and blockchain technology.

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Interesting Reads

Latin America takes global lead in preference for centralized exchanges

Latin American crypto users, as per a Chainalysis report, exhibit a distinct preference for centralized exchanges (CEXs) over decentralized ones compared to the global average. Venezuela stands out with a 92.5% preference for CEXs, linked to unique circumstances, including a humanitarian crisis. Colombia favors CEXs at 74%, while Argentina leads in cryptocurrency transaction volume in the region. Additionally, three Latin American countries rank in the top 20 on Chainalysis' Global Crypto Adoption Index, with India, Nigeria, and Vietnam taking the top spots.

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Quick Links

Grayscale GBTC discount falls to 16% as markets bet on Bitcoin ETF approval

Some analysts say GBTC’s discount is narrowing because investors are pricing in the SEC’s approval on several pending spot Bitcoin ETF applications.

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Miscellaneous

KYC hook for Uniswap v4 stirs community controversy

The introduction of a Know Your Customer (KYC) verification hook in Uniswap v4 has sparked controversy. This tool allows developers to implement KYC checks in the decentralized finance protocol, raising concerns about potential regulation and whitelisting by authorities. Rolled out by a community developer as an opt-in feature, it utilizes nonfungible tokens for verification, primarily for liquidity providers. Critics worry this could lead to regulatory constraints on DeFi protocols. This development comes amidst growing global scrutiny of DeFi, with Uniswap v4 set to introduce customizable hooks in early 2024, accessible to governance-approved entities.

Apple briefly pulls MetaMask from App Store

Apple briefly removed the Ethereum wallet MetaMask from its App Store on October 14, raising concerns about potential permanent removal. This action was due to Apple's policies against apps running unrelated background processes, including cryptocurrency mining. MetaMask, crucial for accessing Web3 decentralized applications, has over 30 million users. A spokesperson assured users it wasn't a security issue and they were working to resolve it. This isn't the first time MetaMask has faced challenges from Big Tech. In 2019, it was suspended from Google Play. Apple's 30% revenue-sharing requirement has also been a barrier for crypto firms.

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Resource of the Day

How to build a DApp on Ethereum

Building a DApp on Ethereum involves understanding decentralized applications (DApps), choosing the right blockchain (like Ethereum), and considering factors like security and user experience. Developers need prior experience in software or web development, and Ethereum's established ecosystem makes it a popular choice. Researching and planning the DApp's requirements, along with testing and debugging, are crucial steps. Costs can range from $15,000 to $30,000 or more, depending on the project's complexity. Challenges include market competition, scalability issues, transaction fees, regulatory uncertainties, and the need for skilled blockchain developers. Despite these, Ethereum remains a leading platform for DApp development.

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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.