Italy announces capital gains tax on cryptocurrencies in 2023 budget -#38!

The cryptocurrency business is thriving, but a lot of things are happening, including Italy announcing a capital gains tax on cryptocurrencies, Telegram building a decentralized exchange, and crypto-wallets, Crypto winter hurt confidence, but building digital asset infrastructure remains vital, says Morgan Stanley and much more!


In this issue:

  • Italy announces capital gains tax on cryptocurrencies in 2023 budget.
  • Telegram to build a decentralized exchange, and crypto-wallets.
  • Decentralized exchange $GMX flips Uniswap in daily revenue for the first time.
  • Ethereum Ropsten testnet will completely stop working in December 2022.
  • Kraken cuts 30% of its workforce to survive crypto winter
  • Morgan Stanley: Crypto winter hurt confidence, but building digital asset infrastructure remains vital.


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Italy announces capital gains tax on cryptocurrencies in 2023 budget

Reports indicate that beginning in 2023, Italy intends to impose a capital gains tax on digital assets to increase its regulatory foothold in the cryptocurrency industry. Capital gains on digital asset trading of more than 2,000 euros would be taxed at 26%, as stipulated in the country’s budget plans for 2023.

The bill aims to increase transparency in the system by having citizens report their digital asset ownership. As such, under the proposal of Prime Minister Giorgia Meloni’s cabinet, taxpayers would be able to report the value of their assets as of January 1, 2023, for a 14% tax.

The proposed legislation includes transparency requirements and a stamp duty that applies to digital currencies. However, the bill is still subject to change in the parliament. Italy’s move follows its European neighbor Portugal, which suggested a 28% tax on capital gains from cryptocurrency retained for less than a year in October of this year.



Telegram to build a decentralized exchange, and crypto-wallets

As the cryptocurrency industry reels from the collapses of some of its former leading companies, the Telegram instant messaging platform is devising plans to capitalize on the growing distrust in centralized intermediaries.

Pavel Durov, the founder and CEO of the app popular among the cryptophiles, announced Wednesday that Telegram would build a set of decentralized tools, including a decentralized cryptocurrency exchange and non-custodial wallets. Owners of such wallets have full control of their private keys and hence their crypto assets.

“The blockchain industry was built on the promise of decentralization but ended up being concentrated in the hands of a few who began to abuse their power,” the executive wrote in a Telegram post, citing the collapse and subsequent bankruptcy of crypto exchange FTX. “This way we can fix the wrongs caused by the excessive centralization, which let down hundreds of thousands of cryptocurrency users.”

Durov pointed to the success of Fragment, a decentralized auction platform he helped build, and The Open Network (TON), its underlying blockchain. Fragment sold $50 million worth of Telegram usernames in less than a month, according to Durov, and will expand beyond usernames in the coming days.



Decentralized exchange $GMX flips Uniswap in daily revenue for the first time

According to the most recent data, GMX earned more daily revenue than Uniswap, becoming the market leader for the first time. Delphi Digital reported that the platform raked in $1.15 million in trading fees, while that of Uniswap stood at $1.06 million. Moreover, GMX is now the fifth-largest decentralized application on Token Terminal’s dashboard, trailing behind already established players such as Ethereum, OpenSea, dYdX, and PancakeSwap. Formerly known as Gambit Exchange, GMX is essentially a trading platform initially launched on Arbitrum One last September and later this year on Avalanche.

Over the past 30 days, Arbitrum has earned total trading fees of well over $93.5 million. During the same time frame, Avalanche amassed nearly $25 million. Self-custodial wallet ZenGo, too, experienced unprecedented growth with an over 375% increase in asset deposits and a 230% jump in new wallet users who deposited funds in just a week since FTX paused withdrawals.

In recent times, volumes on DEXes have been increasing, signifying that more investors are seeking to gain control over the assets in response to their dented confidence in centralized gatekeepers. It is still early to determine if the trend of investors leaving CEXs will continue. Still, it is also important to note that DEX volume for November skyrocketed to $90 billion, increasing by over 80% since last month. DEX volume on the Ethereum blockchain alone surged by an astonishing 730% to $2.3 billion on November 10, up from a mere $278 million a few days earlier. Meanwhile, there has also been a significant bump in usage among DEX aggregator platforms.



Ethereum Ropsten testnet will completely stop working in December 2022

The Ropsten network, a clone of the main Ethereum network that’s used for testing and experimental purposes, will shut down by the end of this month. Between Dec. 15 and Dec. 31, node and infrastructure providers will halt Ropsten’s maintenance, Ethereum core developers noted.

“The vast majority of remaining validator nodes will be shut down from December 15-31, 2022. After this, Ropsten will no longer be supported by client, testing, or infrastructure teams,” an official blog from the Ethereum core team said, referring to service providers who maintain Ropsten.

Ethereum core developers will also sunset a second test network called Rinkeby in the middle of 2023. The team advised developers to migrate Rinkeby applications to either Goerli or Sepolia, which are test networks that will continue to be supported. In the Ethereum ecosystem, multiple testnets exist to allow developers to deploy applications and check for bugs free of cost before those are deployed on the mainnet. But they can be deprecated when they are no longer needed.

For years, Ropsten and Rinkeby have been used for testing Ethereum upgrades before they are rolled out on the leading network. After The Merge, which transitioned Ethereum from a proof-of-work to a proof-of-stake consensus mechanism, Ropsten and Rinkeby were said to be inaccurate replica environments for the blockchain.



Kraken cuts 30% of its workforce to survive crypto winter

Cryptocurrency exchange Kraken announced on Nov. 30 that it has made one of its “hardest decisions” and is cutting down its global workforce by approximately 1,100 people, comprising approximately 30% of its total workforce, amid current market conditions.

According to CEO and co-founder Jesse Powell, Kraken had to triple its workforce due to the fast-growing crypto ecosystem, and the current pullback takes the size of the company’s team back to where it was 12 months ago. Powell shared in a tweet, “Macro was already tough and we held out but recent industry woes diminished near-term optimism about a crypto rebound.”

Lower trading volumes and fewer client sign-ups amid turbulent market conditions have contributed to Kraken’s decision to cut down its expenses by slowing down hiring efforts and avoiding large marketing commitments.

According to the exchange, these changes are necessary “to sustain the business for the long-term while continuing to build world-class products and services in selective areas that add the most value for our clients.”

The company stated that employees being let go were given a decent severance package, which includes separation pay covering 16 weeks of base pay, performance bonuses, and four months of healthcare coverage including counseling, immigration support, and career support, among other benefits.


Morgan Stanley: Crypto winter hurt confidence, but building digital asset infrastructure remains vital

Investor interest in digital assets has changed in the past year as crypto prices declined, Morgan Stanley (MS) said in a research report. the bank said that retail interest in price levels and volatility has eased while demand for regulated products for traditional financial clients has increased, following this month’s demise of crypto exchange FTX and its sister company Alameda research, the “market is reassessing the value of all the project tokens issued” and “whether they have been used as assets for leverage,” the note said.

Discussions at the bank’s second annual Cryptocurrency vs. Traditional Finance event showed more bankruptcies and deleveraging are expected. While it is unclear how long that process may take, most participants believed that “crypto, blockchain, and distributed ledger technology are going to be developed further in the future and increasingly used to trade financial assets.”

The focus is still on building digital-asset infrastructure, though some investors believe that it could be a 10 to 15-year journey before digital assets become fully mainstream. The bank notes that it is now a year since what’s become known as the crypto winter started.

Recent price action and characteristics suggest that the current cycle is similar to that seen in 2017-18. Both times, bitcoin’s (BTC) price fell by more than 70% from its peak and experienced a similar drop around this point in the process following a period of low volatility.

Crypto market leverage, however, is more significant in this cycle than it was in the last. That’s probably because crypto institutions such as market makers, companies, and investors are the dominant traders in the market this time round, whereas, in 2017-18, retail investors dominated.

Morgan Stanley expects deleveraging to continue, noting that stablecoin market capitalization, particularly for the largest stablecoin tether (USDT), has been falling in the last month. It noted that Alameda Research was the largest single recipient of the tether.



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