“We’ve moved beyond just digital gold. We’ve got financial services, art, gaming as a subcategory of NFTs, Web 3.0, decentralized social media, play-to-earn — all of that made investors think “we don’t have enough exposure,”

– Spencer Bogart, general partner at San Francisco-based Blockchain Capital LLC, on why this is the year digital assets went mainstream

“You know that our attitude towards cryptocurrencies is of, to put it mildly, skepticism. Related to this are the significant risks for retail investors and the substantial volatility for this type of asset. In addition, cryptocurrencies are opaque in that they are frequently used for illegal operations or criminal nature. Therefore, we cannot welcome investments in them. We seek to prevent the Russian financial infrastructure from using crypto transactions. This is quite doable.”

– Central Bank of Russia governor Elvira Nabiullina addressed the state of crypto regulation in Russia

“And as the ecosystem grows, especially with nascent emergence of metaverses, dozens of protocols will become increasingly visible. In that scenario, there will not be a single blockchain, but we will have several interconnected chains.”

– Gavin Wood, Polkadot Founder and Ethereum co-founder, on Polkadot parachain launch

“Institutional custody is not the same as retail custody, and BitGo wallets and custody were designed from the ground up to meet the needs of institutional investors, and BitGo is the only independent qualified custodian focused on building the right market structure and facilities to enable institutions to enter the digital asset space with confidence.”

– Mike Belshe, CEO of BitGo, discussed that AVAX is prepared to cater for the needs of accredited investors and the roile of BitGo as AVAX’s institutional custodian

Headlines

Regulations

Bank of Russia governor addresses crypto ban

The Central Bank of Russia governor Elvira Nabiullina, stated that the cryptocurrency markets are opaque and commonly used for unlawful activities. Russia emphasized the launch of a regulatory-compliant digital Ruble as a serious competitor to cryptocurrencies.

Sources: Cointelegraph, Dec 17 2021

Bank of England calls for tighter crypto regulation globally

The Bank of England stated that regulatory and legal frameworks for crypto-assets both domestically and worldwide would need to be strengthened. According to the BOE, these changes will “manage risks, encourage sustainable innovation, and maintain broader trust and integrity in the financial system”. While acknowledging the benefits of innovation, the financial policy committee (FPC) meeting minutes stated that these advancements could only be sustained if “effective public policy frameworks” were in place. It also included suggestions for including systemic stablecoins in the bank’s regulatory sphere of influence.

FSOC may seek to mitigate stablecoin risks

The Financial Stability Oversight Committee (FSOC) released its report for 2021, which recommended that authorities continue to monitor digital assets for potential systemic concerns. The Committee also reviewed the recently released President’s Working Group report on stablecoins If Congress does not act, the FSOC has stated that it will take actions to alleviate the risks of stablecoins and DeFi, for example, market value fluctuations, operational challenges, and cybersecurity threats.

NFTs and Metaverse

Luxury NFTs total value to reach $56 bn by 2030

The total value of luxury NFTs from premium brands will significantly rise and may reach $56 billion by 2030. The primary drivers are expanding NFT use cases (such as digital collectables and social gaming) and a broader audience. Luxury brands will attract customers of different age groups and redefine the landscape.

Animoca Brands partners with Bored Apes Yacht Club to create a blockchain game

The designers of Bored Ape Yacht Club (BAYC) have partnered with Animoca Brands to build this new game. The BAYC game is expected for release in 2Q22 and will feature play-to-earn mechanics. Launched in April 2021, the BAYC collection of 10,000 randomly generated apes is one of the most popular NFT projects by trading volume.

Nike acquired NFT collectible startup RTFKT

Nike acquired RTFKT at undisclosed terms as part of its strategic push into the metaverse. Launched in 2020, RTFKT is a collectibles startup known for NFTs that combine culture and gaming and last valued at $33.3 million.

Digital Asset Exchange

Binance Singapore withdraws license application following Hg acquisition

Binance Singapore withdrew its application for a digital payment token services license with the Monetary Authority of Singapore (MAS). Binance.sg intends to wind down all cryptocurrency dealing services by Feb 13, 2022, and all accounts must be closed by then. Binance will have a presence in Singapore through its recently-purchased Hg Exchange (HGX), a Singapore-based private securities exchange.

Uniswap community approves proposal to deploy Uniswap V3 contracts over Polygon

The Uniswap community approved the governance proposal that requested Uniswap V3 deployment over the Polygon PoS Chain. Over 72.6 million users participated (representing a consensus of 99.3%) in the on-chain vote. The deployment will be supported by a $15 million long-term liquidity mining fund and a $5 million adoption fund. Polygon CEO published the proposal on Nov 20 and recommended that “deploying to Polygon PoS can bring a lot of benefits” – such as user base growth, higher user activity, higher revenue, market capture and return to the original DeFi vision.

Solana on-chain development increases post-DDoS attack

As indicated by daily GitHub submission rates, Solana’s on-chain development activities surpassed Polkadot and Cardano over the last month to become the most popular blockchain. Solana received 90 daily GitHub submissions between November 12 and December 13. Solana mitigated the issues without a network shutdown, the DdoS attack raised severe concerns over network vulnerability.

Doge rises after Musk confirms Tesla will accept Doge for merchandise

Tesla CEO Elon Musk revealed that dogecoin (DOGE) would be accepted for select purchases on Dec 14. Musk tweeted “Tesla will make some merch buyable with Doge & see how it goes”. Dogecoin gained 25% on the back of the announcement.

Polkadot announces official parachain launch

Polkadot network launched five parachains – Acala, Astar, Clover, Moonbeam, and Parallel Finance. The five projects received c. 99 million DOT during the auction period, valued at around $2.4 billion. These projects lease their 96-week parachain slots and focus on a number of use cases, including DeFi, lending etc.

Circle’s USDC stablecoin deployed on Avalanche blockchain

Circle announced that it had introduced its USD Coin (USDC) stablecoin on the Avalanche network as part of its strategic push into stablecoin. Tether launched USDT stablecoin on the Avalanche Network in November. With the USDC support on Avalanche, more developers can create environmentally-friendly decentralized finance (DeFi) applications. The Solana, TRON, Stellar, and Hedera networks support USDC.

Senate hearing on stablecoins points to new regulations

The Senate Banking Committee is laying the groundwork for new stablecoin regulation. Congress has been hesitant to enact substantive digital asset policy. Stablecoins are more similar to traditional financial laws because they have identifiable third parties to target, than sectors as DeFi.

Source: The Block, 14 Dec 2021

HSBC and Wells Fargo partner to use blockchain for FX transactions

Wells Fargo and HSBC are partnering to use blockchain technology to settle bilateral foreign exchange (FX) transactions. The cooperation would facilitate the settlement of transactions denominated in USD, CAD, GBP, and Euro. The platform would settle roughly 100 transactions each week during the initial stages and expand to incorporate more currencies.

Indian State government launches initiative to support Web2 and Web3 startups

The Telangana state government has launched the India Blockchain Accelerator initiative which aims to support Web2 and Web3 early-stage startups and emphasize India’s potential to become a net exporter of technology. The initiative is launched with CoinSwitch Kuber, a unicorn crypto exchange, and Lumos Labs. Telangana’s Chief Technology Officer emphasized the importance of a stronger focus on pilots and production-ready apps.

Fig 1. Key cry ptocurrency performance