News Updates December 20, 2022
1. Top 5 best-performing cryptocurrencies by returns in 2022. The cryptocurrency market has suffered several significant setbacks during 2022, but some of its assets have performed better than others, particularly in terms of returns per month, a new yearly report has revealed.
Specifically, the top five best-performing assets in 2022 were Tron (TRX), Monero (XMR), Binance Coin (BNB), Ethereum Classic (ETC), and Dogecoin (DOGE), as per the new ‘State of the Network’ report by the blockchain analytics platform CoinMetrics published on December 20.
In terms of the aggregated results for the entire year, all 36 assets observed in the analysis recorded declines in returns, but the drops have been the lowest for the above five cryptocurrencies.
Finally, Dogecoin saw returns of +89% in October, its best month, followed by March at +8%. Compared to this performance, DOGE’s worst month was May, when the token recorded a 31% loss, followed by December and a drop of 26%.
Losers in returns
On the bottom of the chart, LUNA recorded a 100% loss of returns in May, after which the tracking stopped with the implosion of the Terraform Labs ecosystem that also led to the de-pegging of Terraform’s stablecoin TerraUSD (USTC).
Another loser is FTT, the native token of the crypto exchange FTX, the collapse of which resonated across the crypto industry, culminating in the arrest of its founder and former CEO, Sam Bankman-Fried. FTT suffered a 95% decline in returns in November, followed by a slowdown and a 22% drop in December.
Interestingly, Solana (SOL) found itself in the company of ‘losers’, recording a loss of 93% in returns for the entire year, with the worst performance recorded in November, when it lost 59% amid concerns about its future after validators released a total of 50.7 million SOL, worth nearly $1 billion at the time.
2. Nansen Report Suggests a Final Dip Can Occur Before Crypto Prices Rise.
A recent report from Nansen delves deeper into analyzing crypto valuations and fundamentals to determine whether a crypto winter has ended. The report mainly takes into consideration three main indicators.
These include the “leading macro indicator for the US dollar and two crypto-derivative metrics: a mean-reverting call-put implied volatility index and a crypto risk premium that proxies crypto valuations.”
The report talks about the weakening of the price of USD which is related to the interest rate hikes by the Fed. Initial conclusions also revealed that it is too early to call for a transition to easier global financial conditions. It also stressed the fact that the bottoming of crypto assets is likely not there yet.
The Nansen report also suggests that the equity risk premium and crypto risk premium are likely to jump higher in the event of a US recession and a US equity sell-off.
It is therefore possible that crypto prices experience a further (and “last” ?) leg down in this cycle before financing conditions turn more favorable to both equity and crypto assets.
The final conclusion by Nansen is with a belief that the Fed is likely to tighten the financial conditions for a longer period. To add to the effects of decision by the Fed, the cryptocurrency market has been going through a slew of unforeseen events. The fall of Terra in May and the recent fall of FTX have triggered a stronger bear market. It also caused the prices of cryptocurrencies to fall unpredictably.
3. Elizabeth Warren's New Financial Surveillance Bill Is a Disaster for Privacy and Civil Liberties
The proposal would turn blockchains into permissioned ledgers surveilled by centralized gatekeepers.
On Wednesday, Senator Elizabeth Warren (D-Mass.) introduced the “Digital Asset Anti-Money Laundering Act,” which would impose sweeping surveillance and registration requirements on almost all participants in blockchain networks – including software developers, miners and wallet creators. The bill would also effectively ban privacy-enhancing technologies in blockchain networks. The bill is a disaster for digital privacy and civil liberties.
Marta Belcher is the president and chair of the Filecoin Foundation and the Filecoin Foundation for the Decentralized Web and general counsel and head of policy at Protocol Labs. She is also special counsel to the Electronic Frontier Foundation and a member of the Zcash Foundation Board. Her views are her own.
The bill would require nearly all blockchain network participants to register as financial institutions
The bill would require almost all participants in blockchain networks to register as money service businesses, including not only miners and wallet creators but also software developers. Those who would need to register as money service businesses under the bill’s shockingly expansive language include miners, validators, nodes, both custodial and "self-hosted" cryptocurrency wallet providers and, as a catch-all, any “independent network participants” who have “control over network protocols.”
Anyone who fits into one of these categories (i.e., basically any blockchain network participant) would need to register with the government as a money service business, develop and maintain complicated anti-money-laundering programs, collect the personal information of every person who uses their software and automatically file reports with the government about users’ transactions over a certain amount (regardless of whether those transactions are suspicious).
4. Binance joins U.S. lobby group's executive committee.
Binance is joining the executive committee of the Chamber of Digital Commerce, a U.S. lobby group for the blockchain industry, as the world's biggest crypto exchange steps up its engagement with regulators.
Binance will contribute to research and potentially influence the shape of crypto legislation through discussions with policymakers and regulators, according to a statement. The crypto giant joins traditional finance firms like Visa and Deloitte as well as blockchain firms such as Circle and OKCoin. The exchange's U.S. unit, Binance US, has been on the executive committee since 2020.
The move marks another milestone as Binance has bolstered its regulatory capacity in the past year, after an earlier track record of getting into trouble with financial regulators.
“As an organization at the crux of the industry’s rapid growth and complex regulatory environment, working hand in glove with policymakers, regulatory bodies and industry groups like the Chamber are imperative to our mutual mission of fostering the sustainable development of sensible regulations for cryptocurrency and blockchain which ensures protections for users,” Joanne Kubba, Binance's vice president of public affairs, said in the statement.
Newest member
The group's newest member “has established itself as a leader in this emerging ecosystem,” according to Blain Rethmeier, vice president of public affairs at the Chamber of Digital Commerce.
Binance is also playing an ever-growing role in shaping the crypto industry from the inside. The company is looking to invest into crypto firms with a $1 billion "industry recovery initiative" fund to cushion the blow from the collapse of rival exchange, FTX.
Yet there is some speculation about the financial health of the exchange, with significant outflows reported last week. The lack of transparency of Binance’s finances was also subject to a Reuters investigation this week.
5. Lower Crypto Tax In India Union Budget 2023?: What To Expect
India budget for the financial year 2023-24 might have scope of lower crypto tax, after the government faced criticism for its tough stance.
India Crypto Tax News: With India’s finance minister Nirmala Sitharaman set to place the budget for 2023-24 soon, the crypto community is hoping for relief in the tough crypto tax stance. The Union Budget 2023 will be placed in the country’s Parliament on February 1, 2023. Even as the crypto market is yet to gain regulatory clarity around the globe, the scope of the industry continues to rise. This is despite the huge hurdles it witnessed in the form of Terra network collapse and the recent FTX bankruptcy.
While several countries around the world are still yet to provide a clear stance on crypto regulation, countries like Singapore and India are approaching it with a selective approach. In what could be the beginning of a huge project, the country’s central bank recently launched the Digital Rupee (e₹) for the country’s wholesale businesses in select cities. This is also seen as a part of the Reserve Bank of India’s ongoing efforts to launch its own Central Bank Digital Currency (CBDC).
6. Kazakhstan Tightens Regulation for Miners, Looks to Develop Broader Crypto Industry
Kazakhstan, one of the world’s largest bitcoin mining hubs, is working on new legislation for the industry.
Kazakh legislators approved a bill last week that will introduce corporate tax for bitcoin miners as well as restrictions for the industry’s energy consumption nationwide.
The law, dubbed “On Regulating Digital Assets in Kazakhstan,” was one of three pieces of crypto-related legislation approved by the country’s lower house, known as the Mazhilis, last Thursday, according to the parliament website. The bill now heads to the Senate for discussion and another round of voting. The legislation came to the table only in recent months, but the central Asian nation had been struggling with power shortages since at least fall 2021.
If the Senate also approves the bill, the president has to sign it for it to become law. The Senate might vote on amendments, in which case the bill will be sent back to the Mazhilis.
Kazakhstan saw a massive influx of crypto miners from neighboring China after Beijing banned the industry in May 2021. At that time China was the world’s largest bitcoin mining hub.
It didn’t take long before Kazakhstan’s electrical grid, much of it a legacy of Soviet times, started crumbling under the new load. On top of the miners’ demand, technical failures in interconnection lines and power stations greatly exacerbated the situation, such that Kazakhstan, which until 2021 was a net power exporter, now sometimes imports energy from Russia.
