Snapshot Web3

November 17, 2023

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Regulatory and Legal Updates

Dubai’s crypto regulator VARA switches leadership as it ramps up operations

The Virtual Asset Regulatory Authority (VARA) of Dubai is undergoing a leadership change in preparation for its full-scale market operations in 2023. Henson Orser, the incumbent CEO and former banker at Nomura Holdings, who led VARA in adopting a new regulatory regime for cryptocurrencies post-FTX collapse, will be replaced by Matthew White, a former PwC global advisor. Orser will continue to assist VARA as a consultant. This leadership shift coincides with tightened rules and penalties imposed by the United Arab Emirates on unlicensed virtual asset service providers, part of efforts to be removed from the Financial Action Task Force's "grey list"​​.

Global securities body IOSCO unveils crypto regulatory framework proposals

The International Organization of Securities Commissions (IOSCO) has released a report outlining policy suggestions for crypto and digital asset markets. These recommendations aim to establish a unified global regulatory approach, focusing on investor protection and market integrity regarding centralized crypto asset service providers. IOSCO's proposals include applying existing rules or creating new ones per jurisdiction, targeting areas like conflicts of interest, market manipulation, fraud, and cross-border risks. IOSCO, comprising 35 global regulators, seeks to align these suggestions with its securities regulation goals and standards. Previous IOSCO reports covered DeFi, stablecoins, and influencers, emphasizing the need for national regulators to develop channels for reporting misleading promotions and tracking online information​​​​​​.

Vivek Ramaswamy unveils crypto policy platform criticizing mixer sanctions

U.S. Republican Presidential candidate Vivek Ramaswamy unveiled a crypto policy framework titled “The Three Freedoms of Crypto” at the North American Blockchain Summit. The framework advocates that developers of smart contract code should not be held liable for how their code is used. Ramaswamy proposes to direct government action towards prosecuting bad actors, not the developers or the code itself. He specifically criticized the sanctions against Tornado Cash, a crypto mixer, arguing that such actions violate the First Amendment. He also promised regulatory clarity for new cryptocurrencies and protection for self-hosted wallets. Tornado Cash was sanctioned by the U.S. government in 2022 for allegedly facilitating money laundering, a decision criticized for targeting the code rather than the operators​​​​​​.

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Innovation and Launches

Sushi taps into ZetaChain to begin testing native Bitcoin DeFi swaps

DeFi platform Sushi has partnered with ZetaChain, an interoperability platform, to explore native Bitcoin (BTC) swaps across 30 different blockchain networks. This partnership enables BTC trading without wrapping on Sushi's decentralized exchange (DEX) deployed on ZetaChain. Ankur Nandwani, a core contributor to ZetaChain, believes this collaboration will bring Bitcoin’s user base to the DeFi sector natively, countering arguments against unwrapped asset bridging. Sushi's head chef, Jared Grey, views this integration as a major advancement in DeFi, terming it a "game-changer." Sushi is set to become a launch partner for ZetaChain's mainnet, which will fully support Bitcoin interoperability​​​​​​​​.

Singapore central bank to trial live wholesale CBDC for settlements

The Monetary Authority of Singapore (MAS) announced a pilot program for a live Singapore dollar-based central bank digital currency (CBDC) to be used by local banks for settlements. MAS managing director Ravi Menon revealed the plan to use the CBDC for instant settlements across commercial banks at the Singapore Fintech Festival. Previously, MAS only simulated CBDC issuance in test environments. In the pilot, banks will issue tokenized liabilities to facilitate transactions with merchants, settled via an automatic transfer of a wholesale CBDC. This CBDC is primarily intended for use by central and commercial banks for payments. Additionally, MAS introduced five new industry pilots to its Project Guardian to assess various use cases around asset tokenization, expanding its participants to include major financial institutions like BNY Mellon, HSBC, and Citigroup​​​​​​.

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Scams and Hacks

Ukraine officials get training on crypto and virtual assets investigation

Fourteen Ukrainian officials received advanced training on investigating financial crimes involving virtual assets from Nov. 14 to Nov. 17 in Vienna, Austria. This training, organized by the Office of the Co-ordinator of OSCE Economic and Environmental Activities and the United Nations Office on Drugs and Crime, aimed to enhance Ukraine's resilience against crimes like money laundering. The officials were trained in tracing crypto transactions across various blockchains using specialized analytics software. This initiative is part of a project funded by the United States, the United Kingdom, Germany, Romania, and Poland, supporting governments in Georgia, Moldova, and Ukraine to mitigate criminal risks associated with digital assets and cryptocurrencies​​​​.

Miscellaneous

Tether plans major expansion into BTC mining with $500M investment: Report

Tether, a stablecoin firm, is planning a significant expansion into Bitcoin mining under the guidance of Paolo Ardoino, who is set to become Tether’s CEO while retaining his position as chief technical officer of parent company Bitfinex. Tether intends to invest around $500 million in the next six months to construct mining facilities and invest in other miners in Uruguay, Paraguay, and El Salvador, aiming to achieve 1% of the BTC mining network's computing power. This expansion includes part of a $610 million debt financing facility extended to German miner Northern Data Group. By the end of 2025, Tether expects to increase its direct mining operations to 450 MW, with a consideration for a 300-MW facility. The mining setups will be housed in containers for mobility in response to changing electricity prices​​​​.

Crypto lobby spending in US set to beat 2022 record: Report

The U.S. crypto industry is on track to surpass its 2022 record in lobby spending, having already allocated $20.19 million in 2023, not including Q4 figures. This trend indicates a significant increase from previous years, with the total spending reaching $22.2 million in 2022, up from $8.5 million in 2021 and even less in prior years. The number of companies involved in lobbying remains stable compared to 2022, with Coinbase leading the spending efforts. These investments reflect the growing influence and commitment of the crypto sector in shaping regulatory and policy environments in the United States​​.

Polygon gas fees spike 1,000% amid Ordinals-inspired token craze

Polygon, an Ethereum layer-2 network, experienced a 1,000% spike in gas fees, peaking at $0.10, due to a surge in transactions related to minting the new Ordinals-inspired POLS token. This spike in activity was highlighted by Polygon founder Sandeep Nailwal, who noted the unusually high transaction volume. The minting of POLS tokens led to the use of over 102 million MATIC tokens, valued at around $86 million, as gas. However, Polygon gas fees have since returned to normal levels, around 882 gwei. This event mirrors a similar spike on the Bitcoin network earlier in the year, following the release of the Ordinals protocol which enabled direct NFT minting on the Bitcoin blockchain​​​​​​.

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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.