News Updates December 03, 2022
1. Will Grayscale be the next FTX?
Grayscale is fighting the good fight on behalf of everyone in cryptocurrency. On Nov. 18, Grayscale, the asset manager running the world’s largest Bitcoin fund, released a statement detailing the security of its digital assets products and affirming that it won’t share its proof of reserves with customers.
“Due to recent events, investors are understandably inquiring deeper into their crypto investments,” the statement begins, which is quite the understatement following the implosion of FTX and the inquiry into Sam Bankman-Fried’s questionable leadership. In no time, the question on everyone’s lips became clear. Will Grayscale be next?
The answer is that it’s unlikely. And that’s largely because the people at the top, the ones who made Grayscale what it is, appear to be more competent than Sam Bankman-Fried ever was.
Let’s look at the facts.
It’s true and possibly undeniable that the crypto industry will take another dive if Grayscale doesn’t fix its balance sheet. The space simply cannot afford another crash, not so soon after FTX and not that of such a key player. Grayscale oversees more than $10 billion in BTC, Ether and other assets and represents its parent company’s biggest revenue generator.
2. Viral Tea Stall: This Roadside Tea Seller In India Accepts Crypto Payments
Industrialist Harsh Goenka on Friday took to Twitter to share a photo of a tea seller in Bengaluru who accepts cryptocurrency payments.
You must have seen the tea seller’s on the nook. Those who only have a table with a few utensils. In earlier times, you had to pay some cash to buy tea from them. At present, it is the era of crypto, so tea is available in crypto. If you have not seen this tea seller, then we are giving you information about it.
Industrialist Harsh Goenka on Friday took to Twitter to share a photo of a tea seller in Bengaluru who accepts cryptocurrency payments. Goenka captioned the photo, “The New India.” Shubham Saini, a crypto trader, runs the tea stall after dropping out of his BCA course and losing his profits in the 2021 crypto market crash.
3. Crypto Derivatives DEXs Reposition for Life After FTX
Decentralized exchanges are retooling their public-facing approach.
The collapse of crypto derivatives exchange FTX is driving more attention to its on-chain competitors and prompting these decentralized exchanges (DEX) to double down as an alternative.
Whether they can win the trust of the trading public is yet to be seen. But on a DEX it is virtually impossible to inconspicuously commingle funds (as the FTX centralized exchange appears to have done) when everything’s traceable on the blockchain.
That’s driven lots of new interest to some of the earliest decentralized players. Dan Gunsberg, creator of Solana-based derivatives exchange Hxro, said that in recent weeks he’s seen a boom in interest for his trading platform, which he claims cannot fall prey to the same pain points that felled FTX and its sister company, Alameda.
Hxro founder Dan Gunsberg speaking at Solana Breakpoint 2022 (Danny Nelson/CoinDesk)
The collapse of crypto derivatives exchange FTX is driving more attention to its on-chain competitors and prompting these decentralized exchanges (DEX) to double down as an alternative.
Whether they can win the trust of the trading public is yet to be seen. But on a DEX it is virtually impossible to inconspicuously commingle funds (as the FTX centralized exchange appears to have done) when everything’s traceable on the blockchain.
That’s driven lots of new interest to some of the earliest decentralized players. Dan Gunsberg, creator of Solana-based derivatives exchange Hxro, said that in recent weeks he’s seen a boom in interest for his trading platform, which he claims cannot fall prey to the same pain points that felled FTX and its sister company, Alameda.
“This was not a [decentralized finance] problem,” Gunsberg said of the latest market collapse. “FTX and Alameda, as far as we know, were incredibly centralized, controlled by a single person. These things metastasize because of human error.”
DeFi is hardly a magic salve for crypto’s multi-billion-dollar woes. Protocols can get hacked, duped, drained and worse, costing their users massive aggregate losses. In contrast with the “black boxes” of centralized exchanges, though, DEXs operate according to their open-source code. Gunsberg noted DEXs have on-chain assets that are open for all to see – so long as one knows where to look.
4. Uzbekistan Approves Rules for Issuance and Circulation of Crypto Assets.
The authority responsible for crypto oversight in Uzbekistan has determined the order of issuing and circulating digital assets in the country. The main reason behind the move is to establish a mechanism that would allow local companies to attract capital through coins and tokens.
Uzbekistan Government Sets Out to Regulate Digital Asset Investments
The National Agency of Perspective Projects (NAPP), under the President of Uzbekistan, has released a new regulation on the procedures for the issue, registration, and release in circulation of crypto assets in the Central Asian Nation.
The document provides basic legal definitions for crypto assets and makes distinction between the different types. It introduces requirements for crypto issuers, depositaries and custodians and determines their obligations, including those concerning relations with customers.
The authority has also approved rules for the establishment and maintaining of an electronic register of crypto assets and adopted accounting standards for the rights associated with them and those of their holders.
Crypto depositories will be responsible for providing services for the issuance, registration, circulation, and storage of crypto assets. Issuers can use them or other electronic platforms, the NAPP said, pointing out that the nominal value of the coins must be expressed only in the national fiat, the Uzbekistani som.
The agency emphasized that the issuance of unsecured tokens is prohibited. Using words such as “state,” “state-secured,” “state-supported,” “Uzbekistan,” “Uzbek,” “national,” and “som” in the names of the cryptos is banned. The regulator also clarified:
The main purpose of the adoption of this document is to create a new mechanism for business entities to attract investments and develop their activities by issuing and registering the issue of secured tokens.
The NAPP further warned against any unauthorized activities related to the circulation of crypto assets in the country or the use of services by providers that have not obtained a license to offer them. The same applies to firms involved in the mining of cryptocurrency.
Uzbekistan has been taking steps towards the comprehensive regulation of its crypto sector with several decrees signed by President Shavkat Mirziyoyev and resolutions by the National Agency of Perspective Projects. The country recently licensed two companies to provide exchange services.
5. How to keep your cryptocurrency safe after the FTX collapse
Sam Bankman-Fried’s fraud of misappropriating users’ funds has led investors to explore options that can help safeguard their investments.
The fall of the FTX crypto exchange forced many to reconsider their overall approach to investments — starting from self-custody to verifying the on-chain existence of funds. This shift in approach was driven primarily by the lack of trust crypto investors have in the entrepreneurs after being duped by FTX CEO and co-founder Sam Bankman-Fried (SBF).
FTX crashed after SBF and his accomplices were caught secretly reinvesting users’ funds, resulting in the misplacement of at least $1 billion of client funds. Efforts to regain investor trust saw competing crypto exchanges proactively flaunting their proof of reserves to confirm users’ funds’ existence. However, community members have since demanded that the exchanges show their liabilities to safeguard the reserves.
With SBF, the self-proclaimed “most generous billionaire,” committing fraud in broad daylight with no visible legal implications, investors must maintain a defensive stance when it comes to protecting their investments. To safeguard assets from fraud, hacks and misappropriation, investors must take certain measures to keep total control of their assets — often considered as best crypto investment practices.
Move your funds out of the crypto exchanges
Crypto exchanges are widely used to purchase, sell and trade cryptocurrencies in exchange for a small fee. While other methods, including peer-to-peer and direct selling, are always an option, higher exchange liquidity allows investors to match orders and guarantee no loss of funds during the transaction.
The problem arises when investors decide to keep their funds in wallets provided and owned by the exchanges. Unfortunately, this is where most investors learn the lesson “not your keys, not your coins” the hard way. Cryptocurrencies being stored on exchange-provided wallets are ultimately in possession of the owner, which in the case of FTX users, was misused by SBF and associates.
Hardware wallet: The safest bet for storing cryptocurrencies
Hardware wallets offer total ownership over the private keys of a crypto wallet, thus limiting the funds’ access only to the owner of the hardware wallet. After procuring cryptocurrencies from an exchange, users must voluntarily transfer their assets to a hardware wallet.
