By Reuters | Updated: 6 January 2022
Cryptocurrency-linked crime surged to a record high last year in terms of value, with illegal addresses receiving $14 billion (roughly Rs. 1,04,200 crore) in digital currencies, up 79 percent from $7.8 billion (roughly Rs. 58,060 crore) in 2020, according to a blog from blockchain analysis firm Chainalysis released on Thursday.
As of early 2022, Chainalysis said illicit addresses already hold over $10 billion (roughly Rs. 74,440 crore) worth of cryptocurrencies, with the majority of this held by wallets associated with crypto theft.
Illicit addresses are defined as wallets tied to criminal activities such as ransomware, Ponzi schemes, and scams.
That said, illicit activities’ share of total crypto transaction volume remained low at just 0.15 percent in 2021. Total transaction volume surged to $15.8 trillion (roughly Rs. 11,76,14,410 crore) last year, up more than 550 percent from 2020 levels.
Chainalysis, however, said the 0.15 percent figure could still rise as the firm identifies more addresses tied to illegal transactions and incorporates that into the total volume.
In its last crypto crime report, Chainalysis had said that 0.34 percent of 2020’s crypto transactions was associated with illegal activity. That number has now been raised to 0.62 percent.
“Criminal abuse of cryptocurrency creates huge impediments for continued adoption, heightens the likelihood of restrictions being imposed by governments, and worst of all victimizes innocent people around the world,” said Chainalysis.
Still, the underlying trend suggested that with the exception of 2019 – an extreme outlier year for crypto crime largely due to the multibillion-dollar PlusToken Ponzi scheme – crime has become a small part of the cryptocurrency world.
The report also said the rise in decentralised finance, or DeFi, which facilitates crypto-denominated lending outside traditional banking, has been a big factor in the increase in stolen funds and scams.
In 2020, less than $162 million (roughly Rs. 1,210 crore) worth of cryptocurrency was stolen from DeFi platforms, which was 31 percent of the year’s total amount stolen. That represented a 335 percent increase over the total stolen from DeFi platforms in 2019.
In 2021, that figure rose another 1,330 percent to $2.3 billion (roughly Rs. 17,120 crore), Chainalysis said.
DeFi transaction volume surged 912 percent in 2021, and Chainalysis said outsized gains on decentralized tokens like Shiba Inu have pushed investors to speculate on DeFi tokens.
“The increase in DeFi-related crime is an example of how criminals often exploit new technologies,” Kim Grauer, head of research at Chainalysis, said in an email to Reuters.
“When DeFi started to grow this year, we saw large increases in DeFi protocols being used to launder money as well as DeFi protocols being the actual victims of crimes such as hacking.”
Singapore Central Bank Issues Guidelines to Discourage Crypto Trading by Public
By Reuters | Updated: 17 January 2022
The Monetary Authority of Singapore (MAS) on Monday issued guidelines that limit cryptocurrency trading service providers from promoting their services to the general public, as part of a bid to shield retail investors from potential risks.
Singapore is a popular location for cryptocurrency companies due to a comparatively clear regulatory and operating environment and is among the forerunners globally in developing a formal licensing framework.
But the city-state’s authorities have repeatedly warned that trading in digital payment tokens (DPT), or cryptocurrency, is highly risky and not suitable for the general public, as they are subject to sharp speculative swings.
The new guidelines clarify the expectations of MAS that companies should not engage in marketing or advertising of DPT services in public areas in Singapore or through the engagement of third parties, such as social media influencers, to promote DPT services to the general public.
They can only market or advertise on their own corporate websites, mobile applications or official social media accounts.
“MAS strongly encourages the development of blockchain technology and innovative application of crypto tokens in value-adding use cases,” Loo Siew Yee, MAS Assistant Managing Director (Policy, Payments and Financial Crime), said in a statement.
“But the trading of cryptocurrencies is highly risky and not suitable for the general public. DPT service providers should therefore not portray the trading of DPTs in a manner that trivialises the high risks of trading in DPTs, nor engage in marketing activities that target the general public.”
© Thomson Reuters 2022
Dogecoin Jumps After Elon Musk Tweets Tesla Merchandise ‘Buyable’ With the Token
By Reuters | Updated: 14 January 2022
Meme-based cryptocurrency Dogecoin jumped on Friday after Tesla chief Elon Musk said the electric carmaker will accept it as payment for merchandise.
“Tesla merch buyable with Dogecoin,” Musk tweeted.
Tesla merch buyable with Dogecoin
— Elon Musk (@elonmusk) January 14, 2022
His mid-December tweet saying such use of Dogecoin will be allowed on a test basis sent the cryptocurrency up more than 20 percent. Dogecoin price in India stood at Rs. 15.02 as of 4:30pm IST on January 14.
Dogecoin, popular among retail investors, raced up 18 percent to above $0.2 (roughly Rs. 14) after Friday’s tweet.
Musk’s tweets on the cryptocurrency, including the one where he called it the “people’s crypto”, buoyed the meme coin and caused it to soar roughly 4,000 percent in 2021.
In other Tesla-related news, Musk tweeted on January 13 that Tesla is “still working through a lot of challenges with the government” in India. Musk said this in response to a question on when it would launch its electric cars in the country.
Tesla had plans to begin selling imported cars in India last year and has been lobbying the government to slash import taxes on electric vehicles (EVs) before it enters the market. In October, it took its demands to Indian Prime Minister Narendra Modi’s office.
Musk didn’t identify the “challenges” being worked on in his Twitter post.
© Thomson Reuters 2022
Jack Dorsey Fintech Firm Block Wants Bitcoin Mining for All
By Agence France-Presse | Updated: 14 January 2022
Jack Dorsey on Thursday announced that his digital payments firm Block is building a system to make it easier for people to mine Bitcoin.
Dorsey said in a tweet that Block, formerly known as Square, is “officially building an open Bitcoin mining system,” following through on an idea floated publicly late last year. Bitcoin price in India stood at Rs. 34.11 lakhs as of 12:00pm IST on January
In November, Twitter co-founder Dorsey announced his departure from the social media platform, allowing him to concentrate on his digital payments firm as it expands into cryptocurrency.
Block changed its name from Square late last year to denote a broader mission that includes blockchain and economic empowerment.
Hardware and software teams at Block will openly collaborate with the cryptocurrency community outside the San Francisco-based company, aiming to create a mining system that could be used by anyone, according to Dorsey’s tweets.
Block hardware general manager Thomas Templeton said on Twitter that the project’s aim was: “To make mining more distributed and efficient in every way, from buying, to set up, to maintenance, to mining.”
“We see it as a long-term need for a future that is fully decentralised and permissionless.”
No timeline was given for when Block’s system might be ready. Block is also working on a wallet for storing cryptocurrency, using similar open collaboration.
“For most people, mining rigs are hard to find,” Templeton said in a tweet.
“How can we make it so that anyone, anywhere, can easily purchase a mining rig?”
The price of Bitcoin hit record highs in 2021 thanks to support from traditional finance. But it slid below $40,000 (roughly Rs. 30 lakh) on Monday, falling to its lowest level since the end of September as the world’s leading cryptocurrency showed no end to its volatility.
Created following the 2008 global financial crisis, Bitcoin initially promoted a libertarian ideal and aspired to overthrow traditional monetary and financial institutions such as central banks.
In more recent times, climate change watchers have shone a spotlight on the huge amount of electricity used to power computers required to unearth new Bitcoin tokens.
Digital Pound Could Hit Financial Stability and Erode Privacy, UK Lawmakers Warn
By Reuters | Updated: 13 January 2022
A digital pound used by consumers could harm financial stability, raise the cost of credit, and erode privacy, though a version for wholesale use in the financial sector demands greater appraisal, British lawmakers said on Thursday.
Britain’s central bank and finance ministry said in November they would hold a consultation this year on whether to move forward on a central bank digital currency (CBDC) that would be introduced after 2025 at the earliest.
Central banks across the world have stepped up work on CBDCs to avoid the private sector dominating digital payments as cash use falls. The prospect of widely-used cryptocurrencies issued by Big Tech has also galvanised such efforts.
But an e-pound used by households and business for everyday payments could see people move cash from commercial bank accounts to digital wallets, said the report by a committee in the House of Lords, parliament’s unelected upper chamber.
That could spark financial instability in times of economic stress and increase borrowing costs as a key source of lenders’ funding would dry up, it said.
A digital pound could also harm privacy, the report added, by allowing the central bank to monitor spending.
“We were really concerned by a number of the risks that are posed by the introduction of a CBDC,” Economic Affairs Committee Chair Michael Forsyth told Reuters.
Many benefits for the consumers could be “achieved by alternative means with fewer risks,” Forsyth said, pointing to regulation as a better tool to ward off the threat of crypto issued by Big Tech firms.
However, a wholesale CBDC used to transfer large sums could make securities trading and settlement more efficient, the report said. Britain’s central bank and finance ministry should consult on its advantages over the expansion of the existing settlements system, it said.
Britain’s parliament should have the final say on any decision to launch a e-pound, the report said, calling for lawmakers to also vote on its governance.
A CBDC would have “far-reaching consequences for households, business and the monetary system,” Forsyth said. “That needs to be approved by parliament.”
© Thomson Reuters 2022
NFT Sales Hit $25 Billion in 2021, But Growth Shows Signs of Slowing
By Reuters | Updated: 11 January 2022
Meanwhile, some of the world’s top brands, including Coca Cola and Gucci, have also sold NFTs.
NFT sales volume totalled $24.9 billion (roughly Rs. 1,83,960 crore) in 2021, compared to just $94.9 million (roughly Rs. 700 crore) the year before, DappRadar, said on Monday. DappRadar collects data across ten different blockchains, which are used to record who owns the NFT.
Estimates of volumes vary by different data provider, depending on what is included. Transactions which take place ‘off-chain’, such as major NFT art sales at auction houses, are often not captured by the data.
CryptoSlam, which also tracks multiple blockchains, said the 2021 total was $18.3 billion (roughly Rs. 1,35,250 crore). NonFungible.com, which tracks the Ethereum blockchain only, put 2021 sales at $15.7 billion (roughly Rs. 1,16,030 crore). Ethereum price in India stood at Rs. 2.5 lakh as of 11:20am IST on January 11.
This means the money spent on NFTs in 2021 is roughly equivalent to the amount pledged at COP26 to help countries phase out coal, or the funding made available by the World Bank to buy and deploy COVID-19 vaccines.
Sales peaked in August, then declined in September, October and November before picking up again in December, data from the biggest NFT marketplace, OpenSea, showed.
This does not appear to be correlated with fluctuations in the price of cryptocurrencies, which are often used to buy NFTs, as bitcoin and ether rose in the September to November period.
Around 28.6 million wallets traded NFTs in 2021, up from some 545,000 in 2020, DappRadar said.
While some see NFTs as the future of ownership in the online world, buying NFTs as a vote of confidence in the development of “Web3” or the metaverse, others are baffled as to why so much money is being spent on items which do not physically exist.
Just 10 percent of traders accounted for 85 percent of all NFT transactions, research published in the journal Nature said.
While the most expensive known NFT sale was $69.3 million, a common price range was $100 (roughly Rs. 7,390) to $1,000 (73,900), NonFungible.com said.
Prices of the most sought-after NFTs were highly volatile. The average sale price of a CryptoPunk image rose from around $100,000 (roughly Rs. 73 lakh) in July to nearly $500,000 in November. By December it had fallen to around $350,000 (roughly Rs. 2.5 crore), CryptoSlam data shows.
Collectible NFTs were the most popular category, followed by art, NonFungible.com said. Some of the most eye-watering NFT sales have been for land in online metaverse environments.
Virtual real estate investor Republic Realm bought land in the virtual world The Sandbox for $4.3 million (roughly Rs. 30 crore) in November.
© Thomson Reuters 2022
GameStop Jumps After Report on NFT Trading Hub, Crypto Pact
By Reuters | Updated: 8 January 2022
GameStop’s stock rallied on Friday after a report that the videogame retailer plans to expand its non-fungible tokens (NFTs) marketplace and partner with crypto firms.
The company’s shares soared last year as it was at the centre of a battle between small investors coordinating on online forums and Wall Street hedge funds that had taken short positions. Since mid-November, its stock has mostly declined.
On Friday, GameStop jumped 7.3 percent to $140.62 (roughly Rs. 10,440) after reports late on Thursday that the company would build an online hub for trading NFTs for virtual game collectibles and establish cryptocurrency partnerships.
A source familiar with the matter told Reuters about GameStop’s plans, which had been reported by the Wall Street Journal.
GameStop declined to comment on the reports.
NFTs, which use blockchain to record the ownership of digital items such as images and videos, surged in popularity in 2021, leaving many confused about why so much money was being spent on copiable digital items that do not physically exist.
Highly volatile crypto assets have tumbled in recent months, with Bitcoin plummeting to a more than three-month low of $42,001.97 (roughly Rs. 31.18 lakh), down about 38 percent from its $69,000 (roughly Rs. 51.21 lakh) all-time high in November. Bitcoin price in India as of January 8 at 11:15am IST was Rs. 33.92 lakh.
Ether, used to buy NFTs, has slumped to $3,219.77 (roughly Rs. 2.39 lakh), levels last seen in early October. Ether price in India as of January 8 at 11:15am IST was Rs. 2.6 lakh.
“Meme stocks are speculative rather than fundamental and, to a degree, cryptos are also little speculative in nature … too much of an exposure to cryptos could have an effect on the balance sheets of these companies,” warned Mirabaud analyst Neil Campling.
Short selling against GameStop increased by about 1 million shares to 8.4 million in the past 30 days, now worth $1.11 billion (roughly Rs. 8,240 crore) and equivalent to 13 percent of GameStop’s free float, according to data from S3 Partners.
Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, said Friday’s share move was unlikely to be a short-covering rally.
“First we would need to wipe out recent mark-to-market profits on the short side, which means getting back to levels in the $170 – $200 (roughly Rs. 12,600 to 14,800)stock price range,” for a short squeeze to happen, Dusaniwsky said.
© Thomson Reuters 2021
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