The cryptocurrency business is thriving, but many things are happening, including, Canadian Securities administrators backing a regulated crypto futures market and crypto ETFs, Wimbledon teaming up with Andy Murray to launch a new NFT project, UAE becoming the leading destination for Bitcoin miners, and much more!
In this issue:
- Canadian Securities administrators back regulated crypto futures market and crypto ETFs.
- ETF approval may boost Bitcoin’s liquidity, but it won’t be a game changer -JPMorgan.
- $30B has been stolen from the crypto ecosystem since 2012.
- Wimbledon teams up with Andy Murray to launch a new NFT project.
- Lightning Labs releases tools letting AI transact and hold Bitcoin.
- UAE is becoming the leading destination for Bitcoin miners.
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Canadian Securities administrators back regulated crypto futures market and crypto ETFs.
In a move that reaffirms its commitment to embracing cryptocurrencies while ensuring investor protection, the Canadian Securities Administrators (CSA) has publicly expressed its trust in the regulated futures market for crypto. The CSA, Canada’s chief financial authority, believes that the inclusion of crypto futures promotes greater price discovery and offers a robust mechanism for hedging against price fluctuations.
This announcement comes alongside the CSA’s issuance of guidance to assist fund managers in complying with legal requirements for investment funds holding crypto assets.
The CSA’s 15-page document serves to defend the presence of crypto exchange-traded funds (ETFs) in Canada, emphasizing their potential as effective tools for hedging against price volatility. It particularly highlights Bitcoin and Ether as markets that provide optimal support to public crypto asset funds, while also prioritizing investor protection. To safeguard investor interests, the CSA places restrictions on the proportion of illiquid assets within these funds, ensuring that assets can be promptly disposed of through open market channels.
Recognizing the evolving nature of the crypto space, the CSA expects investment funds to conduct thorough due diligence to determine whether the crypto assets they plan to invest in qualify as securities or derivatives. Additionally, the regulator emphasizes that investment managers are prohibited from lending assets that are not classified as securities.
The document also outlines minimum expectations for custody of crypto assets. These expectations include primary storage in cold wallets, asset segregation, transparency through blockchain visibility, insurance coverage against corporate crime, and regular reporting to fund auditors. By setting these standards, the CSA aims to establish a secure and transparent environment for investors participating in the crypto market.
Addressing the issue of crypto staking, the CSA clarified that it does not prohibit staking outright but urges fund managers to remain vigilant regarding the potential illiquidity of assets during staking activities. Compliance with the existing restrictions on illiquid assets remains a crucial requirement.
With its latest guidance, the CSA aims to foster a regulated and supportive environment for crypto investments in Canada. By striking a balance between investor protection and facilitating innovation in the crypto space, the CSA is positioning Canada as a favorable destination for crypto ETFs and other crypto-related financial products.
ETF approval may boost Bitcoin’s liquidity, but it won’t be a game changer -JPMorgan.
A possible approval of a spot Bitcoin exchange-traded fund (ETF) won’t be a game changer for crypto markets, although it might benefit the leading cryptocurrency, according to a report by JPMorgan managing director Nikolaos Panigirtzoglou. Based in London, Panigirtzoglou is part of JPMorgan’s global market strategy team. He believes that a Bitcoin (BTC) ETF in the United States would have a similar impact as those seen in Canada and Europe, where spot Bitcoin ETFs have been around for some time.
According to the report seen by Bloomberg, Bitcoin ETFs have overall “attracted little investor interest” in other jurisdictions in the past two years, further “failing to benefit from investor outflows from gold ETFs.”
The strategist also sees the benefits of a Bitcoin fund receiving the green light in America. According to Panigirtzoglou, an approval could bring more liquidity to Bitcoin markets but could also lead to a migration of trading activity from BTC futures products.
Panigirtzoglou’s view goes in a different direction from the high expectations that surround an approval of a Bitcoin ETF in the United States. During an interview on July 6, BlackRock’s CEO, Larry Fink, suggested that investors could turn to Bitcoin as a hedge against inflation and the devaluation of fiat currencies. “Let’s be clear: Bitcoin is an international asset,” said Fink, adding, “It’s not based on any one currency, and so it can represent an asset that people can play as an alternative.” As reported by the Labor Department, the annual inflation rate for the U.S. was 4.0% for the 12 months ending in May.
$30B has been stolen from the crypto ecosystem since 2012.
From 2012 to the present, over $30 billion in crypto has been hacked in 1,101 documented incidents, a July 7 report from SlowMist has revealed.
According to the blockchain security firm, the top five most common hacks are smart contract vulnerabilities, rug pulls, flash loan attacks, scams, and private key leaks. The losses represent roughly 2.5% of the current market capitalization of cryptocurrencies.
Out of the total incidents, there were 118 exchange hacks, 217 Ethereum ecosystem hacks, 162 BNB Smart Chain ecosystem hacks, 119 EOS ecosystem hacks, and 85 hacks related to non-fungible tokens, or NFTs. Exchange losses were the steepest, amounting to over $10 billion lost in the past decade.
Hack events with over $1 billion lost peaked in the early 2010s and from 2019 to 2021. Security incidents have been somewhat muted from 2022 onwards, which is consistent with other reports.
In the early days of Bitcoin (BTC), notable attacks included the 2014 Mt. Gox hack and the 2016 Bitfinex hack. Mt. Gox was the biggest Bitcoin exchange in the world at the time when it filed for bankruptcy in 2014 after discovering that 850,000 of its customers’ BTC ($25.2 billion at the time of publication) had been stolen via discreet hacks and siphoning over several years. The exchange has since recovered 200,000 BTC ($6.1 billion) and is redistributing them to creditors.
Likewise, in 2016, Bitfinex suffered a security breach resulting in the loss of 119,576 BTC worth around $70 million at the time and $3.7 billion now. On Feb. 8, 2022, 94,000 stolen BTC were recovered by special agents working for the United States Department of Justice.
Wimbledon teams up with Andy Murray to launch a new NFT project.
Wimbledon, the historic tennis tournament, has joined forces with former champion Andy Murray and digital artist Refik Anadol to introduce an official art NFT on the Ethereum blockchain. The groundbreaking digital art project, titled “The Exposition,” incorporates 18 years of Murray’s data, including his notable Grand Slam victories in 2013 and 2016, combined with unique motion-capture sessions. This initiative marks a world-first fusion of digital art, sport, and data science.
“The Exposition” NFT collection was made available for purchase on manifold.xyz to coincide with Murray’s second-round match at the tournament in 2023 and will remain accessible until July 16. Each NFT, created in collaboration with Web3 consultancy FAN3, is priced at $147. Despite Murray’s elimination from the tournament on Friday, the NFTs continue to be offered for sale.
Developers of “The Exposition” employed a distinctive algorithm that will incorporate millions of inputs from statistical, motion, audio, and visual data. The resulting vibrant bursts of colors aim to encapsulate the drama, rivalries, and Championship victories of Murray’s illustrious Wimbledon career, offering a visually striking representation of the data. The project description highlights the artwork’s reimagination of how high-performance sports data can be comprehended and appreciated.
Expressing his enthusiasm, Murray took to Twitter and shared, “Excited to be partnering with Wimbledon and Refik Anadol Studio on a data-inspired digital art project involving every match I’ve ever played.” The collaboration with Wimbledon and Anadol Studio holds great promise for future releases, with additional projects and endeavors already planned.
Lightning Labs releases tools letting AI transact and hold Bitcoin.
The hype surrounding Artificial Intelligence (AI) is taking multiple industries by storm, and the digital asset industry appears to be readily embracing the tech.
Lightning Labs has become the latest platform to tap the space. The team behind the Bitcoin Lightning Network announced the release of a new set of developer tools to enable the Lightning and AI developer communities to interact with Bitcoin seamlessly.
According to the official blog post, the newly released toolkit assists AI applications such as OpenAI’s ChatGPT to interact with the Bitcoin network to send, receive, and hold the crypto-asset. Lightning Labs explained that the new tools are built on a Lightning native authentication mechanism – L402 protocol. It also uses a popular library called “Langchain.”
The firm also highlighted the problem of rising deployment costs that serves as a barrier due to the current billing paradigm, a crucial aspect that Lightning and the L402 protocol seek to address. As such, leveraging the L402 protocol, any entity with an internet-connected device will be able to receive or acquire Bitcoin instantly. Owing to the Lightning Network, high-volume payments can also be carried out while retaining privacy.
Despite a slow start, Lightning Network has been increasingly embraced by crypto entities. The scaling solution witnessed tremendous growth as measured by the amount of BTC locked within it. The latest data shows that there are now more than 5.4k BTC on the Lightning Network. Binance recently announced that it would start running multiple Lightning nodes to leverage the layer-2 scaling solution in a bid to enable cheaper BTC deposits and withdrawals on its platform.
UAE is becoming the leading destination for Bitcoin miners.
The United Arab Emirates (UAE) is quickly emerging as a leading destination for Bitcoin mining in the Middle East. With over 30 free trade zones and a growing contribution to the Bitcoin mining hash rate, the country has established itself as a pro-Web3 and crypto-friendly environment.
In May, the country’s foray into Bitcoin mining began when Marathon Digital, a prominent Bitcoin miner, partnered with Zero Two, the digital asset arm of Abu Dhabi’s sovereign wealth fund. Together, they established two mining sites in Abu Dhabi with a combined capacity of 250 megawatts (MW).
Abu Dhabi, known for its energy efficiency and status as a trading hub, has become a focal point for various crypto-mining activities in the UAE. Currently, the UAE’s combined Bitcoin mining capacity is estimated to be around 400 MW, accounting for approximately 4% of Bitcoin’s global hash rate. While countries like the United States, China, Russia, and Kazakhstan dominate the global hash rate, the UAE has the potential to climb the ranks due to its available resources.
The UAE is a significant player in the global energy market, and it has been shifting its focus from traditional oil and gas reserves to renewable sources such as solar and nuclear energy. The country’s electricity generation previously relied heavily on natural gas, but there has been a notable increase in the adoption of nuclear and solar energy.
Additionally, the UAE experiences significant fluctuations in electricity demand between the hottest and coolest months, resulting in a considerable loss of generated electricity. In 2021 alone, the UAE’s power and desalination plants wasted 20 terawatt hours, amounting to around $600 million. Bitcoin miners could help fill this gap by utilizing surplus energy. Since Bitcoin mining is increasingly focused on using clean energy sources, the UAE could benefit from its investments in nuclear and renewable energy, making it an attractive destination for miners in the coming years.
Closing
That’s it for now! Thanks for reading today’s newsletter! Be sure to have a look at the Blog section to read our previous editions as well! Have a look at our Guides section if you’re interested in learning more about crypto! And finally, don’t forget to follow us on Twitter!
