Snapshot Web3

October 19, 2023

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Regulatory and Legal News

Sen. Warren, 100+ legislators write White House, Treasury about crypto and terrorism

Senator Elizabeth Warren and over 100 legislators, previously neutral or against cryptocurrency, penned a letter addressing its role in terrorism financing. Referring to reports of Hamas and Palestinian Islamic Jihad raising $130 million in crypto donations, they urged swift action to curb illicit crypto activity, posing nine key questions. The letter gained support from anti-crypto figures and some previously neutral legislators. Treasury Under Secretary Brian Nelson highlighted Hamas' adeptness at accessing formal financial systems through covert means. Additionally, sanctions were imposed on a Gaza-based virtual currency exchange and its operator by the Treasury's Office of Foreign Assets Control.

Council of the EU adopts DAC8 crypto tax reporting rule

The Council of the European Union formally adopted DAC8, the eighth version of the Directive on Administrative Cooperation, which is a cryptocurrency tax reporting rule. This regulation, following the enactment of the Markets in Crypto-Assets (MiCA) legislation in May 2023, will come into effect upon publication in the Official Journal of the EU. DAC8 empowers tax authorities to monitor and assess all cryptocurrency transactions conducted by individuals or entities in any EU member state. It aligns with the Crypto-Asset Reporting Framework (CARF) and MiCA, encompassing all crypto asset transactions within the EU. In the U.S., senators urged swift implementation of crypto tax reporting rules, criticizing a proposed two-year delay.

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Innovation and Launches

Lightning Labs releases Taproot Assets alpha, bringing stablecoins to Bitcoin

Lightning Labs has launched Taproot Assets, enabling stablecoins and real-world assets on Bitcoin and Lightning Network. Taproot Assets v0.3 offers a seamless developer experience for asset management. Ryan Gentry, Lightning Labs' Head of Business Development, envisions it as a pivotal step towards making Bitcoin a global financial network. The integration utilizes existing Bitcoin liquidity. Gentry notes strong demand for stablecoin applications on Bitcoin, emphasizing their global significance. The release is in alpha, indicating ongoing testing for potential bugs. This development aligns with Bitcoin's broader expansion efforts.

ECB officials move to 'preparation phase' for digital euro

The European Central Bank (ECB) is entering the "preparation phase" for the digital euro project after a two-year investigation. The ECB emphasized that the issuance of a central bank digital currency (CBDC) is not confirmed. The two-year phase will focus on finalizing rules and selecting potential issuers, along with testing and experimentation based on user feedback. The final decision on issuance will be made by the Governing Council after the EU's legislative process is completed. Critics scrutinize ECB President Christine Lagarde's remarks about the digital euro's potential for payment control. The digital euro's rollout is expected to draw regulatory and policymaker attention in light of the European Parliament elections in June 2024.

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NFT, Gaming and Metaverse

BAYC creator Yuga Labs completes restructuring to focus on metaverse

Yuga Labs, the creator of Bored Ape Yacht Club NFTs, has completed a restructuring to prioritize their metaverse project, Otherside. CEO Daniel Alegre emphasized the project's significance and stated their commitment to supporting departing team members. While specific details on workforce changes were not provided, Alegre assured that those affected would receive generous severance and assistance in finding new opportunities. This move comes amid ongoing legal battles, including a trademark lawsuit and a class-action suit alleging deceptive promotion of the NFT collection.

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Scams and Hacks

Ethereum DeFi protocol Hope Lend drained after exploit

The Ethereum DeFi protocol Hope Lend suffered a major hack, with two individuals making off with a combined 526 Ether (ETH), valued at $825,357. The successful attacker gained 264 ETH and paid 263 ETH as a bribe to an ETH validator, according to CertiK. Hope.money, the protocol's developer, provided a slightly different account, stating that a single hacker took 526 ETH, paying 263.91 in bribes to a validator. The incident seems linked to wrapped Bitcoin (WBTC) decimals and rounding, similar to a recent Wise Lending hack. Despite the breach, Hope.money assured users that the affected funds remain secure, emphasizing the independence of protocols deployed on their platform.

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Interesting Reads

UK tops crypto activity in Central, Northern and Western Europe: Chainalysis

The United Kingdom leads Central, Northern, and Western Europe (CNWE) in cryptocurrency activity, with a transaction volume of $252.1 billion in the past year, ranking third globally. Chainalysis reports CNWE accounted for 17.6% of global crypto transactions from July 2022 to June 2023, totaling about $1 trillion. This surge in UK crypto adoption aligns with the country's implementation of regulatory measures, including the Financial Services and Markets Bill and the Financial Promotions Regime. Chainalysis also highlighted Eastern Europe as the fourth-largest crypto market, receiving $445 billion in transactions during the same period.

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Quick Links

Tesla earnings: Bitcoin bags untouched as firm splashes out on AI

Tesla held onto its sizeable Bitcoin bags in the third quarter and upped its spending on artificial intelligence and research and development.

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Miscellaneous

Central banks want to look under crypto’s hood — Is this a positive sign?

Central banks, including the Deutsche Bundesbank and the Dutch central bank, are showing interest in gathering more crypto-related data, particularly regarding cross-border Bitcoin flows. This indicates a growing acknowledgment of crypto assets and DeFi applications as integral parts of the emerging global financial ecosystem. However, concerns about transparency and potential risks to financial stability persist. Central banks are grappling with how to gather accurate data, given the decentralized nature of cryptocurrencies and the lack of a pyramid structure akin to traditional finance. The increasing attention from central banks underscores the rising significance of cryptocurrencies, now valued at over $1 trillion.

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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.