Highlights of the Week- Issue #57
Preview
Last week, the IMF is working with El Salvador to support medium-term growth, focusing on Bitcoin-related risks and public debt management. Celsius is suing Tether for $3.5 billion over a disputed Bitcoin liquidation during its bankruptcy. Santa Monica has launched a Bitcoin Office to boost innovation and economic growth. Researchers have found a vulnerability in Bitcoin hardware wallets, posing a security risk. Metaplanet secured a $6.8M loan to expand its Bitcoin holdings. Donald Trump Jr. plans to create a DeFi platform to address banking inequality. The IRS revised Form 1099-DA to ease privacy concerns in crypto reporting, and Thailand's SEC launched a Digital Asset Sandbox to balance innovation with regulation. For more details, continue reading below.
A. Bitcoin Data Dashboard
1. Bitcoin Transactions
2. Supply
3. Mining
4. Transaction Fees
5. Difficulty Retarget
6. Lightning Network (Public)
B. Bitcoin Ecosystem
1. IMF mission to El Salvador focuses on bitcoin and medium-term growth strategies
2. Celsius sues Tether for $3.5 billion in Bitcoin dispute amid bankruptcy proceedings
3. Santa Monica establishes Bitcoin office to boost innovation, education, and economic growth
4. Researchers uncover 'Dark Skippy' vulnerability in Bitcoin hardware wallets, threatening private key security
5. Metaplanet secures $6.8M loan to boost Bitcoin holdings
6. Donald Trump Jr. announces plan for new DeFi platform to address banking inequality
C. Regulation
1. IRS revises crypto tax Form 1099-DA, easing privacy concerns with updated requirements
2. Thailand SEC launches digital asset sandbox
D. Macroeconomy
1. Bank of Japan raises interest rate, Yen surges amid policy shift
2. Economic indicators show recent weakness despite periods of stabilization
A. Bitcoin Data Dashboard
As of Aug 12. 2024
B. Bitcoin Ecosystem
1. IMF mission to El Salvador focuses on bitcoin and medium-term growth strategies
An International Monetary Fund (IMF) mission to El Salvador has issued a statement on supporting the country's medium-term growth, emphasizing policies to manage risks associated with Bitcoin. The IMF noted progress in negotiations towards a fund-supported program, which aims to strengthen public finances, enhance bank reserve buffers, and improve governance. The statement highlighted ongoing discussions with Salvadoran authorities regarding public debt stabilization and Bitcoin management. The IMF stressed the need for enhanced transparency and efforts to mitigate potential fiscal and financial stability risks. The IMF also aims to work closely with Salvadoran officials to finalize policies ensuring long-term stability and prosperity, including plans to bolster financial system reserves and reduce reliance on domestic financing.
Reference: The Block
2. Celsius sues Tether for $3.5 billion in Bitcoin dispute amid bankruptcy proceedings
Defunct cryptocurrency exchange Celsius has initiated a lawsuit against Tether, seeking around $3.5 billion in Bitcoin returns, damages, and legal fees, alleging the misappropriation of 57,428.64 BTC during its bankruptcy proceedings. The lawsuit claims that Tether improperly liquidated Celsius' Bitcoin collateral without giving the
exchange an opportunity to provide additional collateral, as required by their agreement. Tether, however, disputes these allegations, asserting that Celsius itself requested the liquidation to close out its $815 million position. Tether has labeled the lawsuit as baseless and vows to vigorously defend against what it describes as an unjustified "shake down." Additionally, Tether has assured its USDT holders that the lawsuit will not impact them, citing its strong financial position with $12 billion in consolidated equity. Meanwhile, Celsius is also seeking no less than $100 million in damages, plus additional damages to be determined at trial, intensifying the legal battle between the two companies.
Reference: Cointelegraph
3. Santa Monica establishes Bitcoin office to boost innovation, education, and economic growth
The City of Santa Monica, California, has launched a dedicated Bitcoin Office to foster education, identify economic opportunities, and solidify its position as a key player in the Bitcoin innovation space. The office was established following a unanimous vote by the city council on July 11 and became publicly visible on August 8. The Bitcoin Office, in partnership with the nonprofit organization Proof of Workforce, aims to empower unions, workers, and organizations by exploring how Bitcoin can enhance their missions and well-being. It signals Santa Monica's commitment to integrating Bitcoin into its economic strategy. As part of its initiatives, the city will host a Bitcoin festival in October. This festival will serve as a more modest yet significant event, contributing to the city's efforts to support economic recovery and create new employment opportunities within the Bitcoin industry. The Proof of Workforce Foundation, founded by Santa Monica firefighter Dominick Bei, plays a key role in coordinating these efforts, aiming to position Santa Monica as a leader in Bitcoin education and industry partnerships.
Reference: Santa Monica.gov, Cointelegraph
4. Researchers uncover 'Dark Skippy' vulnerability in Bitcoin hardware wallets, threatening private key security
Security researchers have identified a serious vulnerability, "Dark Skippy," that allows hackers to extract private keys from Bitcoin hardware wallets using only two signed transactions. This exploit, which could potentially affect all hardware wallet models, relies on tricking victims into downloading malicious firmware. Unlike previous methods requiring numerous transactions, "Dark Skippy" works with just a couple and remains effective even if seed words are generated on a separate device. The attack involves embedding parts of the user's seed words into low-entropy secret nonces within the wallet's firmware. Hackers can then use Pollard’s Kangaroo Algorithm to reconstruct the nonces and derive the full set of seed words. The researchers urge manufacturers to implement stronger security measures and advise users to protect their devices, highlighting the ongoing risk of hardware wallet vulnerabilities that have previously led to significant losses.
Reference: Cointelegragh
5. Metaplanet secures $6.8M loan to boost Bitcoin holdings
Japanese firm Metaplanet has secured a 1 billion yen ($6.8 million) loan from MMXX Ventures, one of its shareholders, to expand its Bitcoin holdings. The loan features a 0.1% annual interest rate and a six-month term, starting from August 8, with repayment due in a lump sum. At current market prices, this loan would enable Metaplanet to purchase an additional 118.5 BTC. This loan follows Metaplanet’s recent plan to raise $70 million through a stock rights offering, with $58 million earmarked for further Bitcoin investments. The firm’s strategy reflects a broader commitment to enhancing its Bitcoin reserves, akin to MicroStrategy’s approach. Metaplanet has already acquired 246 BTC, valued at approximately $13.95 million, through seven separate purchases. Despite the firm’s average purchase price of $65,145 per Bitcoin being 12.8% lower than its initial investment, Metaplanet’s stock price surged by 290% since announcing its Bitcoin strategy on April 9.
Reference: Cointelegraph
6. Donald Trump Jr. announces plan for new DeFi platform to address banking inequality
Donald Trump Jr. has revealed plans to create a new decentralized finance (DeFi) platform designed to tackle banking inequality. During a Q&A session on Locals on Aug. 8, he clarified that this initiative is a comprehensive platform aimed at challenging traditional banking systems. Although Trump Jr. did not provide a specific timeline, he highlighted that the project is still in the early stages and will require significant development before launch. He underscored that the platform is intended to address the disparities in financial access, noting the appeal of DeFi for individuals who have faced difficulties with traditional banking.
Reference: Cointelegraph
C. Regulation
1. IRS revises crypto tax Form 1099-DA, easing privacy concerns with updated requirements
The U.S. Internal Revenue Service (IRS) has released an updated draft of Form 1099-DA, which will be used for reporting crypto brokerage account transactions. This new form is scheduled to be implemented by 2025 and will require brokers to report digital asset transactions to their customers. Ji Kim, Head of Global Policy at the Crypto Council for Innovation, highlighted on social media platform X that the revised draft has removed several key elements that were initially required, such as wallet addresses, transaction IDs, and the time assets were acquired. These changes are noteworthy, as the earlier version of the form, proposed by the IRS and the U.S. Department of the Treasury in August 2023, raised significant concerns within the industry. Critics pointed out that the initial requirements posed privacy risks and could have far-reaching implications for the decentralized finance (DeFi) sector. The updated draft appears to address some of these concerns by reducing the amount of sensitive information brokers must report, reflecting ongoing adjustments to the regulatory approach as the IRS seeks to balance transparency with privacy in the rapidly evolving landscape.
2. Thailand SEC launches digital asset sandbox
Thailand's Securities and Exchange Commission (SEC) launched the Digital Asset Regulatory Sandbox on August 9, a significant step in the country's approach to cryptocurrency regulation. This initiative provides a controlled environment for digital asset exchanges, brokers, fund managers, and custodial wallet providers to test and refine their offerings under regulatory oversight. The sandbox, following a March 2024 SEC resolution, balances fostering innovation with ensuring compliance. Participants must meet criteria like capital adequacy and sound management, with a testing period of up to one year, extendable if needed. This move aligns with Thailand's broader shift toward a more friendly regulatory approach, including approval of the country's first Bitcoin ETF for institutional investors. These efforts aim to position Thailand as a leader in the global digital asset landscape while prioritizing investor protection and financial stability.
Reference: Cointelegraph
D. Macroeconomy
1. Bank of Japan raises interest rate, Yen surges amid policy shift
In the past year, speculation has been intense about when the Bank of Japan (BOJ) would tighten monetary policy amid Japan's near 40-year high inflation. The BOJ has now acted, raising the benchmark interest rate from 0.10% to 0.25%, following a previous increase in March from –0.1% to 0.1%. Additionally, the BOJ will cut its asset purchases by half. This surprise hike, along with the anticipated reduction in asset purchases, led to a strong appreciation of the yen, which recently improved to near 148 yen per US dollar from a low of 161 yen. BOJ Governor Ueda remarked that even with the rate hike, the policy rate remains low and continues to be negative in real terms. He indicated that further hikes could follow based on inflation data and does not see 0.5% as a cap. Market expectations are for additional rate hikes, while the US Federal Reserve is anticipated to start cutting rates in September. The yen’s rise is expected to have several impacts: it could dampen inflation, lower import costs, reduce export competitiveness, and suppress carry trade activity as investors unwind positions.
Reference: Deloitte insights
2. Economic indicators show recent weakness despite periods of stabilization
The US economy, which decelerated from high growth rates since Q3 2021, experienced a period of stagnation, showed signs of stabilization, but has recently weakened again. Key indicators—retail spending, construction spending, capital spending, exports, and imports—are reported in nominal dollars. When these indicators fall below the inflation rate (as most now do, except for construction and somewhat retail spending), their real growth rate is negative. Notably, construction spending benefits significantly from the Inflation Reduction Act.
Reference: Lyn Alden