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- El Salvador passes law offering citizenship to Bitcoin investors 🇸🇻🛂
El Salvador passes law offering citizenship to Bitcoin investors 🇸🇻🛂
PLUS: ‘In Argentina, contracts can be settled in Bitcoin’ — Foreign minister. Ethereum ‘Dencun’ upgrade testing is now scheduled for Jan. 17.
Manan Vora
December 22, 2023
Snapshot Web3
December 22, 2023
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Regulatory and Legal News
The Legislative Assembly of El Salvador has reportedly approved a migration law offering expedited citizenship to foreigners who make Bitcoin donations toward government social and economic development programs. The law, passed on December 21 with the support of Nayib Bukele's New Ideas party, is expected to come into force in the coming days. While the Salvadoran government has not officially announced the new law, the National Bitcoin Office (ONBTC) has reposted reports on social media. The bill is considered a "vital interest" of Bukele, with Bitcoin-related projects being developed by foreigners contributing to the country's development. This move comes two weeks after El Salvador introduced the Bitcoin Freedom Visa for foreigners investing $1 million in BTC or USDT in the country.
The International Organization of Securities Commissions (IOSCO) released policy recommendations on regulating decentralized finance (DeFi), citing its unique challenges. While some saw the recommendations as a threat, analyst Matthew Harcourt believes they won't be fatal for established DeFi protocols. Harcourt highlighted IOSCO's recognition of DeFi's importance and evolving nature. He acknowledged potential impacts on early-stage innovation but emphasized that the proposed regulations don't pose an existential risk to decentralized finance. IOSCO's recommendations include identifying "responsible persons" in DeFi and regulating decentralized autonomous organizations like traditional financial firms.
The Financial Services Regulatory Authority (FSRA) in the United Arab Emirates (UAE) has revised its Anti-Money Laundering (AML) and sanctions rules to incorporate elements related to digital assets. The changes specifically enforce the Financial Action Task Force's (FATF) Travel Rule on digital assets, impacting firms under the FSRA's purview. The revisions include provisions defining digital assets as one of the existing payment methods and aim to enhance clarity and alignment with the UAE's regulatory framework to combat money laundering, terrorism financing, and proliferation financing. The UAE has been recognized as one of the most progressive countries in adopting crypto regulations.
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Innovation and Launches
A group within the United Nations Internet Governance Forum (IGF), the Dynamic Coalition on Blockchain Assurance and Standardization, plans to create a decentralized autonomous organization (DAO) in a pilot project to demonstrate its applications in the public sector. The initiative aims to showcase how public sector organizations can leverage blockchain technology and DAO principles to foster transparent, rules-based, and high-integrity governance structures. While the specific use case for the DAO was not mentioned, the emphasis is on demonstrating the decision-making capacity of DAOs rather than their financial aspects. The pilot will be hosted by the nonprofit Government Blockchain Association (GBA) and supported by Ethereum layer-2 solution Gosh.
The Ethereum "Dencun" upgrade is scheduled to begin testing on the Goerli testnet on January 17. Subsequently, it will be added to the Sepolia testnet on January 30 and the Holesky testnet on February 7. The Dencun upgrade aims to reduce fees, enable new features for bridges and staking pools, and limit the use of self-destruct operations on smart contracts. It includes Ethereum Improvement Proposal (EIP) 4844, known as "proto-danksharding," which allows layer-2 rollup networks to store certain transaction data temporarily, potentially reducing transaction fees on layer 2s. The upgrade also features other proposals, including EIP-1153 and EIP-4788, among others. Testing on Ethereum testnets typically precedes the mainnet implementation by several months.
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Scams and Hacks
Scammers reportedly used a wallet draining service named "MS Drainer" to steal around $59 million in cryptocurrency over the past nine months. The scammers utilized Google Ads to target victims with fake versions of popular cryptocurrency sites. "MS Drainer" is a wallet drainer, which is a blockchain protocol allowing scammers to transfer crypto from victims to the attackers without their consent, often by exploiting the token approval process. The scammers employed regional targeting and page-switching tactics to bypass Google Ad audits and deceive users. The activity of MS Drainer peaked in November but has since declined. The developer of MS Drainer reportedly used an unusual flat fee marketing strategy, selling the service for $1,499.99 and providing additional "modules" for extra fees. Wallet drainers have become a significant issue in the Web3 ecosystem.
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Interesting Reads
Solana (SOL) and Avalanche (AVAX) witnessed strong growth on December 21, outperforming Bitcoin as its dominance slightly dropped. The decline in Bitcoin dominance, combined with BTC's consolidation, hints at a potential altcoin breakout, according to technical analysis. The U.S. Dollar Index (DXY) has reversed, down 1.56% on the month, while Bitcoin gained 16.18%, influenced by comments from the Federal Reserve and expectations of a spot Bitcoin ETF approval in Q1 2024. Solana's success is attributed to its improved user experience, mobile accessibility, and ability to handle high-capacity projects. Avalanche experiences growth in DApps, daily active users, and price due to increased users, DeFi incentives, and airdrop rumors.
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Miscellaneous
Cryptocurrency analyst Will Clemente believes Coinbase stock will be the viable option for many TradFi investors to choose after Bitcoin.
Diana Mondino announced the news on X on Dec. 21 following a decree by the Argentine government.
The survey shows over 50% of federal agencies use blockchain analytics tools, but only 11% of state agencies.
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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.
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