Token Chronicle - Week 3 December 2024

Author

Julien Bordas
December 22, 2024

Token Chronicle - Week 3 December 2024

Top cryptos

Extract from CoinMarketCap.com on December 22nd 2024

Meme of the week

Market update: Major breakthrough earlier this week with a new BTC ATH at $108K, followed by a significant drop driven by Jerome Powell's (FED) speech on the FED's inability to hold Bitcoin. Nothing too concerning, as the trend is more tied to the year's end and the upcoming pause. A strong rebound is expected during Donald Trump's inauguration—or perhaps a correction at that time, as Arthur Hayes predicts? The first scenario seems more likely, and any correction would likely be very short-term (Buy the rumor, sell the news). The market saw a slight rebound yesterday, but another correction occurred today, with BTC around $96K and ETH near $3.3K.

Main points this week:

International:

  1. El Salvador: Bukele Yields to the IMF and Amends the Bitcoin Law – What Changes for the Country?
    El Salvador takes a new step: to secure a total funding of $3.5 billion, including $1.4 billion from the IMF, Bukele's government agrees to revise the Bitcoin law. This agreement might be seen as a setback for Bitcoin, potentially stripping it of its status as legal tender. This loan will allow El Salvador to strengthen its economy by stabilizing public finances while supporting social projects, including improving infrastructure, developing education, and expanding access to healthcare. If the agreement is approved, several changes will be implemented:

    • Accepting BTC payments will become optional, even for large businesses.

    • Government BTC purchases will be "limited."

    • Taxes can no longer be paid in Bitcoin.

    • The government will gradually withdraw from managing the Chivo wallet.

  2. Hong Kong Continues to Open Up to Cryptocurrencies, Welcoming Four New Exchanges
    As part of its policy to license crypto platforms, Hong Kong, aspiring to become a major cryptocurrency hub, has stepped up. After licensing three exchanges earlier this year, the Securities and Futures Commission has granted licenses to four more crypto platforms this Wednesday: HKbitEX, Accumulus, DFX Labs, and EX.IO. Simultaneously, the SFC issued a circular providing more details about the licensing process.

  3. El Salvador: Bukele Buys $1 Million in Bitcoin 24 Hours After the IMF Deal
    Despite the concessions made as part of the IMF agreement, El Salvador remains committed to its Bitcoin strategy. This morning, Nayib Bukele's government purchased 11 BTC worth over $1 million, bolstering its strategic reserves.

  4. In 2024, North Korean Hackers Stole $1.34 Billion in Cryptocurrencies
    Out of the total amount of cryptocurrencies stolen worldwide, the share taken by North Korean hackers is undeniably the largest. However, throughout 2024, the sums stolen by North Korean hackers have sharply declined. While they stole less than in 2021 and 2022, they still managed to take $400 million more than last year. Moreover, the number of malicious acts has reached an all-time high of 303 incidents in 2024, almost ten times the count from 2019.

  5. Crypto custody firm Copper has withdrawn its UK registration with the FCA, shifting focus to hubs like Switzerland, Hong Kong, and Abu Dhabi. Led by new CEO Amar Kuchinad, Copper also seeks U.S. regulatory approval, encouraged by pro-crypto policies. Meanwhile, the UK Labour government is introducing regulations for stablecoins and staking services to remain competitive.

Regulation/Compliance/Justice:

  1. FTX: Creditor Repayment Schedule for the Former Crypto Exchange is Finally Known
    It has been over two months since FTX's reorganization plan to repay creditors was approved by the court. This Monday, FTX announced that its repayment plan would take effect on January 3, 2025. The first phase of fund distribution to eligible creditors will occur within 60 days of that date. Simultaneously, the bankrupt crypto platform has signed agreements with BitGo, a provider of digital asset solutions infrastructure, and the exchange Kraken to facilitate these repayments. FTX has not ruled out signing other similar agreements.

  2. "We Are Not Allowed to Own Bitcoins": Jerome Powell Drives Down Cryptocurrencies
    In response to the prospect of a national Bitcoin (BTC) reserve in the United States, Jerome Powell, the Fed's chairman, stated that the agency is not allowed to own bitcoins. He clarified that "this is the kind of thing Congress needs to consider, but we are not seeking to change the law at the Fed." After briefly dipping below $100,000, BTC used this level as support. Other cryptocurrencies, however, saw more pronounced drops, including ETH (-4.2%), XRP (-6.7%), and LINK (-10%).

  3. BiT Global vs. Coinbase: Court Rules in Favor of Brian Armstrong's Exchange
    Dissatisfied with Coinbase delisting Wrapped Bitcoin (wBTC) despite being one of its managers, BiT Global filed a lawsuit against the exchange. However, the company, associated with Justin Sun, failed to convince the federal judge handling the case.

Traditional Finance:

  1. Towards a wave of crypto ETFs next year? A certainty for Bloomberg analysts: Noting the growing success of spot Bitcoin ETFs and spot Ethereum ETFs, many players in the crypto industry wish to issue their own ETFs based on various cryptocurrencies: Bitcoin, Ether, Solana, XRP, etc. For Bloomberg's ETF analyst, ETFs combining Bitcoin and Ether will be launched in 2025. These funds, expected to be issued by Hashdex, Franklin, or Bitwise, will be the next to arrive in the U.S., according to his predictions. They are expected to be followed by Litecoin ETFs—a Bitcoin fork often considered its "little brother"—and HBAR ETFs. The two cryptocurrencies "are not labeled as securities," which will allow the Securities and Exchange Commission (SEC) to ignore complex legal issues related to tokens labeled as securities. Only after these ETFs have been launched does the analyst believe that XRP ETFs and Solana ETFs will enter the U.S. market. "SOL and XRP will have to wait until the new SEC administration is well-established before being seriously considered," said James Seyffart.

  2. Deutsche Bank: Germany’s largest bank wants its own Ethereum-based layer 2: Deutsche Bank, Germany's leading bank, is investing in the development of a layer 2 based on Ethereum, according to a Bloomberg report. This project, using ZKsync technology, aims to meet the specific regulatory and security needs of financial institutions, confirming institutional interest in blockchain and tokenization. Boon-Hiong Chan, head of applied innovation in the Asia-Pacific region at Deutsche Bank, told Bloomberg that a layer 2 is a better choice than a layer 1 like Ethereum from a regulatory perspective. According to him, having its own layer 2 would allow the bank to know the identity of the validators, avoid hard forks, and prevent sanctioned entities from earning transaction fees—requirements far from the ideals of decentralization but necessary for the institutionalization of blockchain technology.

  3. U.S. Bitcoin ETFs now surpass gold ETFs in assets under management: U.S. Bitcoin ETFs have reached a historic milestone: their capitalization now exceeds that of gold-backed ETFs. This shift underscores the growing interest in BTC, driven by a dramatic rise in Bitcoin prices and accelerated institutional adoption within a year. According to Vetle Lunde, head of research at K33 Research, U.S.-based gold ETFs have a total of $128.88 billion in assets under management (AUM), compared to $129.25 billion for Bitcoin ETFs and $14.92 billion for Ethereum ETFs.

  4. France: BPCE group can now offer cryptocurrencies to its clients: On Thursday, Hexarq, a subsidiary of the BPCE group, became the second banking institution to obtain PSAN registration. Hexarq is effectively a subsidiary of the BPCE group and now has the necessary approvals to offer cryptocurrencies to its clients. According to the French Financial Markets Authority (AMF), the company was approved Thursday for the following three services: Digital asset custody; Buying and selling digital assets against a fiat currency; Digital asset exchanges against other digital assets.

  5. The SEC has approved Nasdaq and Cboe BZX filings to list crypto index ETFs from Hashdex and Franklin Templeton, set to launch in January. The funds will initially hold bitcoin and ether, with potential additions like AVAX, LINK, and LTC pending regulatory approval. Weighted 80% BTC and 20% ETH, the ETFs cater to advisor demand for crypto diversification. Analysts note the significance of Hashdex and Franklin leading the launch and anticipate strong market interest, with expectations that competitors like BlackRock may follow.

Tech:

  1. Ripple’s RLUSD stablecoin launches: After successfully achieving compliance last week, Ripple’s (XRP) new stablecoin RLUSD is launching today. Initially, the stablecoin will be listed on several platforms such as MoonPay, Uphold, or Mercado Bitcoin, with potential partnerships with major exchanges over the coming weeks. As a collateralized stablecoin, RLUSD will also publish a monthly audit of its reserves.

  2. Lido ends its staking services on Polygon (POL): Following a governance vote, Lido has announced the end of support for Polygon (POL) staking. "Several factors contributed to this decision: limited user adoption, insufficient rewards, high maintenance costs, and evolving ecosystem dynamics. A key challenge was the changing DeFi landscape, particularly the increased focus on zkEVM solutions. This transition led to a reduced demand for liquid staking solutions on Polygon POS, affecting Lido’s potential as a core DeFi component on Polygon."

  3. Kraken’s Ink layer 2 mainnet launches ahead of schedule: Kraken's layer 2 Ink was initially scheduled for a Q1 2025 launch but is already live on the mainnet. Early on-chain data shows 1.16 million transactions and more than 10,700 wallet addresses. Although these figures are early, less than 24 hours post-launch, DefiLlama reports a total value locked (TVL) of $1.25 million in DeFi. Technically, Ink is part of Optimism’s Superchain. Currently, no token appears to be planned.

  4. Hong Kong's HashKey Group has launched its Layer 2 network, HashKey Chain, on the mainnet. Built using Optimism's OP Stack, it joins Coinbase's Base and Kraken's Ink in the Superchain network. During its testnet, it recorded 25M transactions and 860K wallets. HSK, its native token, is live on exchanges, enabling governance participation.

  5. Avalanche has launched its Avalanche9000 upgrade, the largest technical overhaul since the blockchain's 2020 debut. The upgrade slashes transaction costs, validator expenses, and app development fees. It aims to attract developers to create customized blockchains, or subnets, on its network.

Adoption:

  1. Riot Platforms continues accumulating Bitcoin (BTC) through convertible bond issuance: Several crypto companies are strategically accumulating Bitcoin (BTC) to strengthen their treasuries. Riot Platforms is consistently acquiring more BTC whenever possible. On Monday, Riot Platforms, a crypto-mining company, announced that it had acquired 667 Bitcoin (BTC) at an average price of $101,135.

  2. Sarah Knafo proposes a strategic Bitcoin reserve for Europe—Paradigm shift? Following Donald Trump’s victory and the work of El Salvador’s President Nayib Bukele, Bitcoin is no longer as ostracized as it once was. What about Europe? Attitudes have changed rapidly, but this is the first time the idea of a strategic Bitcoin reserve for Europe has been promoted in the European Parliament. MEP Sarah Knafo, vice-president of the far-right group “Europe of Sovereign Nations,” gave a particularly pro-Bitcoin speech in the European Parliament on Monday, December 16. It is the first time since Donald Trump’s election that such a speech has been delivered in the European Parliament, and notably by a French MEP.

  3. Monad establishes foundation to promote blockchain development and adoption: Three weeks ago, Monad Labs launched the public testnet of its blockchain, a layer 1 with significant promises: 10,000 transactions per second and a block finalization time of one second, all with EVM compatibility. However, the team behind the project aims to boost adoption of its blockchain.

  4. Tether has invested in StablR, a European stablecoin issuer, to boost adoption ahead of the EU's MiCA regulation on Dec. 30. StablR’s MiCA-compliant EURR and USDR stablecoins will integrate with Tether’s Hadron platform to expand beyond Ethereum and Solana. Europe’s euro-pegged stablecoin market nears $400M, compared to $200B for U.S. dollar stablecoins.

  5. Japanese investment firm Metaplanet raised $60.6M through zero-interest bonds maturing in 2025 to accelerate its bitcoin purchases. The firm now holds 1,142 BTC worth $110M, with its stock up 1,890% YTD. This aligns with its May-announced bitcoin reserve strategy, though MicroStrategy remains the largest corporate BTC holder with 439,000 BTC.

Founding and partnerships:

  1. World Liberty Financial (WLFI), supported by President-elect Donald Trump, announced a collaboration with Ethena Labs to integrate sUSDe as collateral in its protocol. WLFI's governance will vote this week on introducing sUSDe to its upcoming Aave instance. Ethena's sUSDe has gained traction with $1.2B supplied assets since mid-November. Even without approval, WLFI and Ethena plan further integrations. WLFI recently acquired $600K in Ethena's ENA tokens, showcasing confidence in its viability.

Disclaimer: The information disclosed here does not constitute an investment advice ; it is for informational purposes only and does not constitute investment advice. You should do your own research while investing in crypto and only invest money you are ready to lose.