CEX.IO Trader’s Digest (December 2022)
Jan 9, 2023

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Now that 2022 is officially in the rearview, it’s time to take stock of how the crypto ecosystem closed out the year by recapping some key highlights from December. With the industry still in a state of recalibration following the collapse of FTX, new regulatory developments in Brazil, Canada, Italy, Nigeria, and the U.S. are all aiming to put guardrails in place to protect users and on-chain value. This comes on the heels of further hacks and exploits on Ankr and 3Commas, which help highlight the urgency of such legislation.

The month also revealed new technical innovations that illustrate how the digital asset space is continuing to break new ground. Between the launch of Chainlink (LINK) staking on the Ethereum Network, to Tezos activating the 12th iteration of its Lima update, to Visa announcing proposed automatic payments via layer 2 (L2) solution SharkNet, there’s a lot to look forward to as we head into 2023.

Our own ecosystem of crypto products and services also announced some new features and upgrades. We launched Exchange Plus to offer advanced trading tools and deep liquidity backed by our institutional arm, CEX.IO Prime. Additionally, our Earn product saw the addition of BTC and ETH Savings, and we introduced a new staking model aimed at increasing user rewards and asset flexibility.

Dive into our final Trader’s Digest of 2022 below, and discover our latest listing of the first Pound sterling-backed stablecoin, poundtoken.

New coin listings

poundtoken (GBPT)

Launched by Blackfridge SC Ltd., a regulated FinTech company backed by British financial regulation, poundtoken (GBPT) is the first Pound sterling-backed stablecoin.

Now available for trade on CEX.IO, GBPT is 100% backed by GBP, held in GBP-denominated bank accounts, and is redeemable 1:1 for Pounds sterling. Additionally, the stablecoin undergoes monthly audits.

Company announcements

Say hello to Exchange Plus

In an effort to build on the legacy and capabilities of our Exchange product, we launched Exchange Plus to expand our offerings and better serve the evolving needs of the global crypto community. With liquidity provided by our institutional arm, CEX.IO Prime, Exchange Plus gives traders access to a deeper pool of bids and asks across a wider range of available markets. This works to decrease price spread and slippages, and allows for a quicker response time when opportunities arise.

Fully-verified CEX.IO users can create up to five (5) sub-accounts on Exchange Plus to experiment with new trading strategies and better manage their risk appetite. Additionally, we’ve added new order types such as Stop, Good til Date, and Immediate or Cancel, to allow for greater flexibility and precision around trade execution. By pairing these enhanced resources with Prime-powered liquidity, Exchange Plus helps open up countless new possibilities for users looking to chart their own course through the crypto ecosystem.

BTC & ETH Savings is live

Our Ho-Ho-HODL promo may be over, but CEX.IO users can still take advantage of BTC and ETH Savings, courtesy of our Earn service. Users can choose to move their BTC and/or ETH into a flexible Savings account to begin earning rewards. 

Current APYs are listed at 0.5% and 1%, respectively for BTC and ETH, with no minimum required. Explore the service at the link below.

We launched a new staking model

Those familiar with our automatic staking model already enjoy hassle-free, no lock-up custodial services, but we asked ourselves, why stop there? While keeping automatic staking intact, we unveiled another method simply called “staking” that returns daily rewards and offers a higher APY. 

To use our new model, users can move funds into designated staking sub-accounts to begin earning rewards. This straightforward process reinforces our commitment to accessible crypto solutions by keeping your assets flexible.

Crypto industry news

DeFi protocol Ankr was hacked

On December 1, 2022 DeFi protocol Ankr was exploited when a bug in the code was manipulated to enable “unlimited minting.” Exchanges were subsequently flooded with synthetic aBNBc tokens. The attack was carried out across a slew of platforms including PancakeSwap, deBridgeGate and Celer bridges, Helio Protocol and TornadoCash. 

Ankr tweeted that all staked assets within the protocol were safe, and pledged to reimburse users who were impacted by the $5 million exploit. aBNBc holders eventually received ankrBNB tokens, according to a pre-hack snapshot. Binance CEO Changpeng Zhao tweeted that his exchange froze $3 million that had been sent to Binance by the hackers, and said that BNB was not affected by this hack.

Reporting from Blockworks later revealed that the attacker behind the exploit was a former Ankr employee, who acted alone. In an effort to shore up security on Ankr, the protocol announced it would be running background checks on employees, and reviewing access rights among staff.

Chainlink launched staking on Ethereum

On December 6, Chainlink announced the launch of staking on the Ethereum network to select addresses that qualified for early access. Eligibility was determined by on-chain and off-chain activity verified by wallet data, and enabled users to stake up to 7,000 LINK in a capped pool.

On December 8, the staking pool opened for all LINK holders to participate. According to their blog post, the initial total pool cap is set at 25 million LINK, with staking rewards being issued through a decentralized alert system. The staking v0.1 pool helps support the ETH/USD data feed on the Ethereum mainnet, and self-regulates its uptime performance with internal reports.

The next version (v0.2) is scheduled to launch in 9-12 months, at which point v0.1 stakers will be able to unlock or migrate their staked LINK and rewards.

Financial Stability Board plans to introduce global crypto standards for regulators

On December 12, Financial Times reported that in early 2023, the international Financial Stability Board (FSB) will issue a timeline for global regulators to implement its first recommendations on the digital asset space. This will include a detailed summary of where policymakers could benefit from “more clarity” before submitting their responses. 

According to Dietrich Domanski, the Secretary General of the FSB, their objective is to create a set of standards that will hold crypto service providers to the same account as banks for providing similar services.

“Many crypto market participants argue that authorities are hostile to innovation. I would say so far, authorities have been fairly accommodating…recent events have reinforced the recognition that it is indeed urgent to address risks,” he said.

Canadian authorities will strengthen supervision over crypto exchanges 

On December 12, the Canadian Securities Administrators (CSA) announced plans to strengthen its approach to crypto oversight following recent events that unfolded in the space. Canadian regulators will expand their existing requirements for platforms currently operating in the country, in an effort to better protect citizens. 

Expanded terms and conditions will require companies to hold Canadian clients’ assets with an appropriate custodian, and segregate these assets from the platform’s proprietary holdings. Additionally, crypto companies will be prohibited from offering margin trading to any Canadian client.

Nigeria could soon pass a bill recognizing Bitcoin and other cryptocurrencies

On December 18, Nigerian-based outlet Punch reported the Nigerian government will soon pass a law to recognize the usage of Bitcoin and other cryptocurrencies. The announcement follows an interview with House of Representatives Committee on Capital Markets Chairman, Babangida Ibrahim. 

Announced as a means to keep up to date with “global practices,” this is a remarkable about-face from efforts to ban the asset class entirely just two years prior. According to Punch, if the Investments and Securities Act 2007 (Amendment) Bill is signed into law it would allow the local Securities and Exchange Commission to “recognize cryptocurrency and other digital funds as capital for investment.”

Tezos activated the Lima update

Tezos activated the 12th iteration of the Lima protocol, which helped increase network bandwidth, introduced a new option for validators (consensus keys), and reduced the risk of bugs in smart contracts.

In addition to improving current layer 1 (L1) Tezos solutions, the Lima upgrade also concludes the development of Smart Rollups, an innovative layer 2 (L2) scaling solution expected to debut in full with future upgrades. A public test of the feature is scheduled to take place in early 2023.

Visa proposed automatic payments using Ethereum L2 solution StarkNet

Visa proposed a solution known as “account abstraction” to enable automated, programmable payments on the Ethereum network. The process creates a smart contract that acts as an intermediary between a user account and a contract account, allowing a self-custodial wallet to make automatic recurring payments to the contract address. The company proposed deploying the solution on the Ethereum layer 2 (L2) network StarkNet, achieving a long-term goal on the network’s roadmap.

When implemented, this could allow users to pay recurring bills such as rent or other utilities, provide timely remittance to subscription services, or make ongoing charitable donations, automatically from a designated wallet address.

SEC claimed FTT as a security 

On December 21, the Securities and Exchange Commission (SEC) issued a complaint against Alameda Research CEO Caroline Ellison, and FTX co-founder Gary Wang, calling FTT a “security.” The crypto community remains divided on whether this move from the SEC could set a difficult precedent for other exchange tokens. 

Crypto enthusiasts on Twitter were quick to point out similarities between FTT and Binance’s BNB token. For example, the SEC highlighted FTT’s buy-and-burn program functions similar to a stock buyback program. Binance introduced a burn program for BNB in late 2021, a move which some worry may spell problems for the token in the wake of this ruling. 

However, several members of the community countered by highlighting that BNB is also a native token of the BNB Smart Chain (BSC), a feature which some believe will set it apart from the contested asset.

Brazil’s President signed a crypto regulation bill into law

On December 23, the Brazilian Securities and Exchange Commission (CVM) approved the permissibility for investment funds to include crypto assets among their holdings. This came on the heels of outgoing Brazilian President Jair Bolsonaro signing a crypto regulation bill that helped pave the way for these new accommodations. 

The law established parameters around fraud involving digital assets, with penalties of fines and between four and six years in jail for illegal activity. Additionally, crypto companies including exchanges and trading intermediaries must now apply for “virtual service provider” licenses to continue offering their services. Businesses will have 180 days to adapt to this new set of rules following the approval.

The U.K. enforced a crypto tax break for foreigners using local brokers

On December 23, the U.K. introduced a tax exemption for foreign traders who purchase crypto through local investment managers or brokers. According to the government’s tax arm, the HM Revenue and Customs, “this exemption is an important factor in attracting global investors, meaning foreign investors won’t be brought into U.K. tax simply by appointing U.K.-based investment managers.” 

The new exemptions took effect on January 1, 2023.

Major NFT projects DeGods and Y00ts will leave the Solana ecosystem

On December 25, leading Solana-based NFT projects DeGods and y00ts announced they will migrate to other networks in Q1 of 2023. DeGod will move to Ethereum, while y00ts plans to bridge to Polygon. 

According to data from Magic Eden, sales of DeGods and Y00ts accounted for nearly 70% of all Solana NFT sales in the week leading up to the announcement.

Waves founder released 2.0 plan with new stablecoin

On December 26, Waves founder Sasha Ivanov tweeted a plan for Waves 2.0. It included a roadmap for achieving 1,000+ transactions per second on L1 using a probabilistic PoS consensus mechanism, and the addition of a “multi-chain EVM L2” solution. 

Ivanov proposed a governance method akin to Power DAO. The updated blockchain is also purported to include SafeFi and “adaptive DAO-governance based stablecoins” bolstered by community engagement.

However, some users were incredulous at the news, and compared Ivanov to disgraced Terra founder, Do Kwon, for peddling financial fiction.

Crypto exchange Gemini was sued by investors over the interest-earning program

On December 27, a proposed class-action complaint filed in Manhattan by Gemini customers claimed the company didn’t register assets available via their Earn program “as securities in accordance with U.S. securities law.” Gemini customers are looking for answers after the exchange’s Earn partner, Genesis Global Capital, paused withdrawals amid the FTX collapse. This suspension has prevented Earn clients from accessing almost $1 billion in deposits.

Soon after, Cameron Winklevoss, the co-founder of Gemini, accused Digital Currency Group (DCG) CEO Barry Silbert of “bad faith stall tactics” in an open letter posted on Twitter. The letter alleges Gemini has awaited word on a repayment agreement for six weeks to no avail. Silbert then responded, tweeting that DCG delivered to Genesis and Gemini’s advisers a proposal on Dec. 29, 2022, and has not had any response. Eventually, Winklevoss demanded Silbert to publicly commit to solving this problem by January 8.

In addition, Su Zhu, a co-founder of the bankrupt hedge fund Three Arrows Capital, blamed DCG and FTX for working together to attack Terra’s LUNA token and stETH. He also added that DCG took substantial losses from the bankruptcy of Three Arrows Capital and other companies, and stated that DCG has insolvency issues.

This mutual tirade fueled concern in the community that Grayscale, also owned by DCG, may have to liquidate some of its trust funds to cover Genesis creditors, including Gemini.

Apart from BTC Trust fund (GBTC), Grayscale offers funds for Ethereum (ETH), Basic Attention Token (BAT), Bitcoin Cash (BCH), Chainlink (LINK), Decentraland (MANA), Ethereum Classic (ETC), Litecoin (LTC), Solana (SOL), Stellar Lumens (XLM), Horizon (ZEN), Filecoin (FIL), and Zcash (ZEC). If Grayscale decides to start with the underperforming altcoin trusts, this could significantly affect ETC, ZEN, ZEC, and LTC as Grayscale holds over 2% of the total market cap for these projects. 

There is also a fear about the potential liquidation of massive Bitcoin and Ethereum funds. Grayscale controls 630,00 BTC (3% of the total market cap) and 3 million ETH (2.5% of the total market cap). However, this is considered the worst scenario which would confirm that DCG has a significant liquidity hole.

3Commas experienced an API database leak

On December 28, an anonymous Twitter user obtained around 100,000 API keys belonging to users of the crypto trading service 3Commas. The leaker published more than 10,000 API keys, and said more would be released in the coming days.

3Commas CEO, Yuriy Sorokin, confirmed the authenticity of the leak, and added that various crypto exchanges were asked to revoke all API keys connected to 3Commas. The leak came to light after dozens of 3Commas users claimed that their API keys had been used to execute trades on exchanges such as Binance, KuCoin, and Coinbase without their consent. The next day, CoinDesk reported the FBI is investigating the 3Commas data breach.

Italian Parliament approved a 26% crypto-gains tax

On December 29, the Italian Parliament approved amendments to the 2023 budget, and introduced a 26% tax on capital gains from crypto trading. The rate applies to gains in excess of 2,000 euros per tax period. 

As an incentive for declaring crypto profits, the new bill also sets a “substitute income tax” for investors at 14% of the value of the assets held as of Jan. 1, 2023, instead of their cost at the time of purchase.

To keep up with the critical news and events in the cryptocurrency space, follow our weekly CEX.IO Ecosystem Updates on our blog

CEX.IO Ecosystem Updates are published every week and provide highly detailed reviews about the price action of Bitcoin and Ethereum, as well as their on-chain activities. Additionally, each update provides a brief synopsis of critical industry events and developments impacting major altcoins.

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