Crypto News Rewind 2021: Q3 – Bitcoin Becomes Legal Tender & Gets Taproot, Improved Ethereum, NFTzation
Here is what happened in the Cryptoworld in the third quarter of this year:
Total crypto market capitalization in Q3
- In July, as Taproot, Bitcoin (BTC)‘s largest upgrade in more than four years, was being tested on the testnet, crypto experts said that BTC could surpass USD 400K in ten years.
- Ethereum (ETH)’s London upgrade was set for August but experts noted that some changes would take longer to have an effect.
- As the US bank JPMorgan questioned El Salvador‘s bitcoin plans, a Paraguayan MP said he would test a BTC bill. However, a draft of the bill leaked online, which made no mention of BTC, and crypto fans declared it a ‘huge nothing burger’.
- A Salvadorian economist hit out at President Nayib Bukele after a report claimed that his family had been secretly planning the release of a stablecoin and a crypto wallet. El Salvador drama didn’t finish there as demonstrators protested the Bitcoin Law in front of the Parliament.
- China kept bashing bitcoin, suggesting that the country was not done yet with their crackdown on crypto mining. Also, a report noted that China’s global bitcoin hashrate had been on a decline even before the crackdown. Yet, experts argued that that could be good for bitcoin in the long term, and some Chinese crypto-related companies were still recruiting new staff despite the crackdown.
- Meanwhile, the People’s Bank of China released an e-CNY whitepaper, and Beijing lashed out at three US Republican senators who had asked for a block on digital yuan for the US competitors at the Olympics.
- Reports revealed that China’s blockchain technology ambitions could be greater than thought, as a media outlet said they had seen evidence of the Chinese Communist Party (CCP)’s blockchain planning.
- With new regulations on the horizon, South Korean commercial banks said they “increasingly” believed only 4 crypto exchanges would survive beyond September 24. Meanwhile, the country’s ruling party launched a crypto task force that was talking about the need to “institutionalize” crypto.
- Police in South Korea said that the crypto exchange V Global could be at the center of a fraud network that sucked in some USD 2bn. The majority owner of the crypto exchange Bithumb, Lee Jung-hoon, got indicted on a USD 88m fraud wrap.
- South Korea’s top financial regulator, the Financial Services Commission (FSC), identified 14 “fake” bank accounts that had been used as fiat on/off ramps by domestic crypto exchanges. Meanwhile, the country’s crypto task force met with a number of major domestic crypto exchanges.
- Meanwhile, some North Korean hackers raided South Korean crypto wallets to the tune of almost USD 310m in two years.
- The European Central Bank (ECB) announced the launch of the digital euro project while bashing BTC. The International Monetary Fund (IMF), an international financial institution, suggested that nations pick up the pace with their digital money development.
- Major crypto exchange Binance CEO had to bow to regulators amid yet another setback from the EU-operated Single Euro Payments Area (SEPA) network. UK bank Barclays’ crypto customers began searching for workarounds after the bank suspended payments to Binance alleging that it would “protect” customers’ funds.
- UK detectives broke the crypto seizure record, confiscating almost GBP 180m (USD 249m) in an unspecified cryptocurrency during an ongoing investigation.
- US federal prosecutors started scrutinizing whether Tether (USDT) executives committed bank fraud.
- A US bipartisan infrastructure bill that would raise USD 28bn from crypto investors was voted to advance.
- Numerous dog-themed coins flooded the market with pumps and dumps, while a Dogecoin (DOGE) fan sued crypto exchange Coinbase for allegedly “misleading” sweepstake ad campaign.
- Crypto lender BlockFi got served with a cease and desist order by the Attorney General (AG) of New Jersey, USA.
- Circle, the issuer of the second-most popular stablecoin, USD Coin (USDC), announced plans to go public on the New York Stock Exchange. Circle then revealed their USDC reserves, which claimed that cash and cash equivalents (e.g. securities) comprised 61% of their reserves, after three years. Meanwhile, its CEO thanked US Secretary Treasury Janet Yellen for putting stablecoins regulation a priority.
- Grayscale Bitcoin Trust‘s shares were about to be freed for sale, bringing a discussion on what it could mean for bitcoin (BTC) price.
- Visa announced that its crypto card users had cumulatively spent over USD 1bn globally in the first half of the year.
- The USD 55bn-heavy fund Marshall Wace was preparing to enter the crypto industry by investing in areas such as digital currencies, stablecoins, blockchain, and payments.
- A survey of 30 central banks, conducted by Swiss investment bank UBS, found that central bankers showed signs of openness to crypto assets such as bitcoin.
- An increasing number of Australian small and medium-sized enterprises (SMEs) and accounting firms were investing in crypto assets, the local crypto exchange Swyftx reported.
- Capital Group, an environmental, social, and governance (ESG)-conscious US-based investment giant, was increasing its indirect exposure to bitcoin via a more than half a billion dollars investment into major BTC bull MicroStrategy.
- Fidelity Digital Assets (FDA), a crypto-focused arm of US-based mutual fund giant Fidelity Investments, began a hiring spree as investors were eyeing crypto assets beyond bitcoin.
- Giant payments network Mastercard announced that they would use stablecoins in a simplified crypto payments card offering.
- America’s oldest bank BNY Mellon doubled down on their crypto strategy by joining another US-based financial giant State Street in order to develop “a platform to support the entire digital asset life cycle.”
- Financial heavyweight Goldman Sachs announced its intentions to launch a DeFi exchange-traded fund (ETF), which became a source of confusion as the fund was largely composed of global IT firms that had spent money on blockchain-related research and did not include even a single crypto-native firm.
- Giant payments network PayPal, during its Q2 2021 investors’ call, teased a new “super app” that would feature “additional crypto capabilities.”
- Tesla‘s chief Elon Musk was in the news again, as he talked BTC with Ark Invest CEO Cathie Wood and Twitter/Square CEO Jack Dorsey, and revealed that SpaceX held bitcoin on their balance sheet and that Tesla was likely to accept BTC again.
- Major crypto exchange Crypto.com estimated that the number of crypto users reached 221m.
- The accounting giant PwC saw an “exponential” increase in inquiries about tax declarations from crypto holders in Spain.
- Decentralized finance (DeFi) protocol Uniswap (UNI) saw some major governance drama after a DeFi education-focused fund abruptly sold off half of the assets allocated to it by Uniswap governance. This also overshadowed the news that startup Optimism launched the Alpha layer-two (L2) solution for Uniswap.
- And July finished with some hefty news about non-fungible tokens (NFTs). The “almost feeless” IOTA (MIOTA) NFT marketplace launched in test mode.
- Major NFT marketplace OpenSea turned into a unicorn as it raised USD 100m and gained a valuation of USD 1.5bn. However, it wasn’t the only crypto firm to multiply its valuation. Major crypto exchange FTX was valued almost 20 times more in its Series B fundraise, raising USD 900m and gaining a valuation of USD 18bn.
- UK superstar artist Damien Hirst created a collection of 10,000 art pieces that came with accompanying digital artwork, starting an NFT vs paper experiment.
- And Ethereum’s co-founder Vitalik Buterin said he would star as a dead kitty in actress Mila Kunis’ NFT animated series, while the sale of 10,420 stoner cats sold out in 35 minutes.
- Despite the drops and sideways trading, July ended up being a green month, and the trend also continued to August.
- Ethereum’s long-awaited London upgrade went live, bringing with it the revamp of the network’s monetary system through the Ethereum Improvement Proposal, or EIP-1559, which also brought an automatic token burn mechanism for each transaction.
- We learned that miner extractable value (MEV), the practice of miners ordering (or being paid to order) transactions in such a way as to front-run or back-run trades made by other users, harmed Ethereum users.
- While Bitcoin was slated to become legal tender in El Salvador within just days, resistance to crypto adoption was continuing. A survey in the country even showed that most of the public was against BTC adoption law. Meanwhile, El Salvador’s parliament approved a bill to launch a USD 150m adoption fund.
- The US bipartisan measure, which had got the green light to advance, met vehement resistance from crypto industry insiders, with the majority even calling the updated bill ‘unacceptable.’ Meanwhile, numerous crypto advocates launched a campaign aimed at driving up support for an amendment to the bill.
- The Senate then passed the controversial infrastructure bill that contained a number of clauses that pertain to crypto players and how they were taxed.
- President Joe Biden’s administration was urging Democrats to include more rules on tax compliance for crypto transactions in the USD 3.5tn budget reconciliation package.
- The US Securities and Exchanges Comission (SEC) boss Gary Gensler hinted that he would seek to regulate DeFi, and we looked into the top 10 key statements he made. The Chairman said that DeFi was not a new concept nor was it decentralized.
- The SEC asked for ‘terabytes’ of California-based start-up Ripple employees’ Slack messages, arguing that they were as vital to the case as emails. Ripple said that this request was “extraordinarily burdensome.”
- Major crypto derivatives platform BitMEX reached a settlement with US regulators, agreeing to pay a civil money penalty of as much as USD 100m to resolve the charges related to investigations by the two agencies.
- In Europe, the European Commission (EC) put forward a legislative proposal that would oblige crypto exchanges to report suspicious transfers to an “unhosted wallets,” among other things. While the EC said it was not targeting non-custodial crypto wallets, experts warned it would apply to any entity transferring crypto assets.
- In South Korea, the ruling party hinted at increased crypto leniency, while a number of smaller crypto exchanges announced their imminent closure. The Bank of Korea (BOK) issued a surprisingly crypto-friendly report about the role crypto could play in the nation’s economy. Meanwhile, Korbit, a crypto exchange in the country, opened its flagship bricks-and-mortar customer service center.
- Then, all South Korean crypto exchanges failed their regulatory “consulting” audits. Meanwhile, with just over a month before key regulations in the country were poised to come into force, the nerve-wracking wait began, with 70% of crypto firms’ sites reported to be down.
- In Russia, energy firm Yantarenergosbyt was set to launch an energy buying platform that made use of blockchain technology. Meanwhile, Vladimir Putin ordered his government and the Central Bank to prepare a system that would force individuals to declare their crypto holdings.
- In Uruguay, a senator unveiled a crypto adoption and regulation bill that would ensure that businesses in the country could legally accept crypto as payments.
- Alberto Fernández, the President of Argentina, called crypto a ‘hard currency’ that can fight inflation. Meanwhile, an Argentinian MP demanded crypto policy answers from the government.
- And an auditor warned that Mexicans should pay tax on bitcoin and altcoin trading profits or run the risk of becoming earmarked as money-laundering offenders.
- Marek Dietl, CEO of the state-controlled Warsaw Stock Exchange (WSE), said that Poland should either join the Eurozone or issue its own central bank digital currency (CBDC).
- The Costa Rican central bank said that BTC was not illegal, but also that they didn’t need a CBDC.
- Meanwhile, the total global investments in blockchain and crypto assets surpassed the previous annual ATH reaching USD 8.7bn. The global crypto adoption grew 2,300% in two years, according to a report by blockchain analysis firm Chainalysis, while digital asset research firm Arcane Research claimed that institutional players could dominate crypto trading within three years
- Circle said it’s on a journey towards becoming “a national digital currency bank.”
- JPMorgan reportedly offered its Private Bank wealth management clients access to an ‘in-house BTC fund’.
- Major payments firm Square agreed to a USD 29bn all-stock deal to buy the Australian buy now-pay later player Afterpay.
- Billionaire investor Ray Dalio said that while he preferred BTC over bonds, he would pick gold over BTC.
- American billionaire and crypto enthusiast Mark Cuban stated that he owns less than USD 500 worth of DOGE.
- Meanwhile, the DACH region, which comprises the German-speaking countries of Germany, Austria, and Switzerland, was expected to inject USD 657bn into digital assets within three years, according to a report by the Russian tech-focused think tank MindSmith.
- Crypto exchange FTX saw more than a million sign-ups in the first half of 2021. Its US arm FTX.US agreed to acquire Ledger Holdings Inc., the parent company of LedgerX LLC., a US Commodity Futures Trading Commission (CFTC)-regulated digital currency futures and options exchange and clearinghouse.
- Coinbase vowed to win back the “trust” of the customers it spooked with a blunder that saw it send “roughly 125,000” people “erroneous notifications” about changes to the security settings.
- Binance hired Greg Monahan, a former United States Treasury Criminal Investigator as its new anti-money laundering (AML) enforcer.
- Jay Clayton, Former SEC Chair, joined the digital asset security and asset transfer platform Fireblock’s advisory board.
- The NFT sector was once again picking up steam as popular collections saw a significant uptick in their trading volumes.
- Courtesy of the NFT craze, Ethereum fees resumed its upward trajectory. This increasing fee started to push users towards rival blockchains, or so-called “Ethereum Killers,” which resulted in solana (SOL) and cardano (ADA) rallying.
- Blockchain-powered play-to-earn mobile game Axie Infinity (AXS) started exploding left and right, hitting major milestones like surpassing USD 1bn in sales volume, hitting 1m daily active users, and becoming “the most valuable NFT collection ever.”
- Tron (TRX) launched a USD 300m fund for GameFi projects.
- It was also disclosed that there was a crypto angle to the Messi-PSG-Barca saga as a significant portion of a bumper pay package to welcome the soccer star was paid in PSG’s fan token.
- The Cryptoverse was not all fun, trade, and games though. A teenage crypto trader was murdered in cold blood, gunned down in broad daylight.
- The crypto sector was in the third place in the world by phishing attacks growth, with their volume for the second quarter of 2021 outpacing the same period last year by 22%.
- A historic crypto hack happened with the theft of USD 600m from Poly Network. However, the attacker, who claimed to be a white-hat hacker, started to return funds, giving back some USD 342m in two days, and the rest a day later. However, the hacker prolonged returning the final key of the multisignature wallet where over USD 200m was trapped.
- Japanese crypto exchange Liquid got hacked too, with the thief taking off with an unconfirmed amount of digital assets.
- DeFi project Cream Finance (CREAM) suffered a USD 25m-heavy exploit.
- The telecoms heavyweight T-Mobile suffered a breach involving the personal and financial data of 100m users, with the hacker asking for BTC 6. Meanwhile, the American State Department decided to give crypto to informants who tip it off on “state-based hackers”.
- On September 7, Bitcoin officially became legal tender in El Salvador, marking a significant milestone for Bitcoin adoption. The country also began keeping BTC as a treasury reserve asset.
- El Salvador’s President said that the country’s Bitcoin app and wallet Chivo had “over half a million users” and promised to fix its bugs. Meanwhile, thousands of people protested against bitcoin adoption in the country.
- President Bukele soon announced that his government bought the dip and purchased an additional BTC 150, which increased the country’s total Bitcoin holdings to BTC 700 at time time.
- Bukele also refuted that the state would seek to pay pensions or allow firms to pay wages in BTC. And soon after it was announced that the first volcanic BTC was mined.
- Bitcoin was testing USD 50K once again. Meanwhile, a large number of bitcoin calls to puts across options exchanges hinted at increased bullishness on BTC.
- Twitter started beta testing a Bitcoin Lightning Network tipping service.
- Vitalik Buterin said his biggest non-technical Ethereum-related regret was ‘the whole 8 cofounders thing.’
- Ethereum L2 scaling solution Arbitrum’s TVL skyrocketed by nearly 9,400% in two weeks, reaching USD 2.12bn.
- Solana mainnet was forced to go offline due to “resource exhaustion” but was restarted.
- Cardano lost some of its momentum due to issues with the much-anticipated launch of smart contract functionality and then lost even more momentum when the launch came closer.
- Litecoin (LTC) pumped then dumped over a fake piece of news that Walmart had entered into “a major partnership” with Litecoin. Litecoin creator, Charlie Lee, who had tweeted the fake news, admitted the screw-up.
- The trading hamster Mr. Goxx outperformed Warren Buffett’s Berkshire Hathaway and S&P 500.
- The Bank for International Settlements (BIS) was set to step up its CBDC pilot program in a cross-border initiative.
- Swiss financial watchdog Finma approved the launch of a crypto asset fund by local fintech Crypto Finance, marking the country’s first regulated crypto asset fund.
- The Canada Revenue Agency was increasingly targeting crypto traders who had not yet reported their profits from transactions as part of a large-scale audit implemented by the tax agency’s Cryptocurrency Section.
- A report warned that an amendment to the US Infrastructure Bill could see crypto users facing prison time of up to five years for receiving digital assets if they don’t report correctly.
- In Russia, the Central Bank told domestic banks to block crypto exchange transactions and called the industry an internet-based “shadow economy.” Meanwhile, blockchain-related salaries were rising fast in the country, as blockchain experts were offered almost 5x the national average salary.
- Most surveyed people supported crypto taxes in South Korea, while over USD 5.2m worth of crypto was seized from suspected tax dodgers in the country.
- In South Korea, larger crypto exchanges announced a ‘temporary’ end of fiat trading. while the country’s crypto sector was left reeling after all but four of the nation’s trading platforms either ceased operations or removed fiat KRW pairings and fiat on/off ramp services.
- For the rest of the month, the crypto sector there was reeling from the carnage. The trading volumes were shrinking at crypto platforms in the country as new restrictions were confirmed, and the taxman was set to be granted the right to search crypto tax evaders’ homes.
- Then, Bitcoin and other crypto dropped alongside stock on worries about potential China’s Evergrande spillover effects.
- Yearn Finance (YFI) creator Andre Cronje warned that a “dark phase” could be ahead in the relationship between the DeFi space and financial regulators, adding that once this phase passes, “a different future” awaits those who made it through.
- Coinbase revealed details about its skirmish with the US SEC, saying that the regulatory body had warned to “sue” it over concerns related to the exchange’s yet-to-be-launched Lend program. Meanwhile, it also briefly “relisted” XRP.
- Coinbase also showed that “strong demand” existed among financial institutions to get exposure to the crypto space.
- A survey by digital asset-focused financial services provider Fidelity Digital Assets found that European and Asian investors drove bitcoin and ethereum investments. Another survey revealed that over 38% of surveyed young Spaniards were considering making crypto investments.
- The major financial rating agency Moody’s said that CBDC and stablecoins could disrupt traditional financial system.
- Mastercard said that it would acquire crypto intelligence firm CipherTrace in a bid to “extend its capabilities deep into the field of digital assets.”
- US movie theatre chain AMC announced they would be adding ETH, LTC and bitcoin cash (BCH) payment options alongside BTC.
- MicroStrategy purchased an additional BTC 5,050 at an average price of USD 48,099 per coin.
- Google Cloud, a suite of cloud computing services offered by Google, partnered with the NFT powerhouse Dapper Labs to help scale the Dapper’s Flow (FLOW) blockchain. Dapper Labs also teamed up with the US professional football league NFL and announced a new digital collectibles marketplace.
- Meanwhile, Bitcoin miners were partnering with operators of struggling, carbon-free nuclear plants in a bid to use more green energy.
- US online trading platform Robinhood introduced new crypto features, rolling out crypto recurring investments. The company soon announced that crypto wallet testing would begin in October.
- DYDX, the governance token of the decentralized exchange (DEX) dYdX, soared as the protocol saw a trading volume double that of Coinbase.
- Crypto exchange Bitfinex paid USD 23.5m (ETH 7,676.61) in transaction fees for a transfer of close to USD 100,000 in tether, but the block’s miner decided to return nearly the entire sum – and the involved non-custodial exchange DeversiFi soon explained what happened.
- Millions in liquidity mining rewards in Compound Finance‘s COMP coin were mistakenly paid out, and the Cryptoverse discussed how legal or ethical it was to claim those rewards.
- The popular Bitcoin website Bitcoin.org got attacked by scammers, and DeFi protocol Vee Finance became a victim of a USD 36m–heavy exploit.
- Japanese giants Rakuten, Line, and Coincheck were preparing new projects in the NFT and blockchain spaces.
- Also in NFT, the original Doge meme NFT was being sold in fractions, while Twitter offered a sneak peek at the upcoming NFT integration.
- FTX said it was “well-positioned” to become “a very solid competitor” to OpenSea, while the latter said they would work to expand onto other blockchains beyond Ethereum and expand tradable NFT categories.
- There were accusations of insider trading on OpenSea, which alleged that the Head of Product at the NFT marketplace, Nate Chastain, had several secret wallets that purchased the marketplace’s drops before they were listed.
- Facebook unveiled a two-year USD 50m investment in global research and program partners to ensure a “responsible development” of the metaverse.
- And in the promising world of crypto, a 9-year-old and a 14-year-old were making thousands of dollars mining crypto, while a 12-year-old earned more than USD 400,000 through NFTs.
And with this ended the third quarter of 2021.
– Crypto News Rewind 2021: Q1 – Rallies, Tesla & MicroStrategy & PayPal Bitcoin Moves, Historic NFT Moments
– Crypto News Rewind 2021: Q2 – Bitcoin Crash, China’s Crypto Crackdown, El Salvador’s BTC Move, Musk vs BTC
– Bitcoin and Ethereum Price Predictions for 2022
– Crypto Adoption in 2022: What to Expect?
– 2022 Crypto Regulation Trends: Focus on DeFi, Stablecoins, NFTs, and More
– DeFi Trends in 2022: Growing Interest, Regulation & New Roles for DAOs, DEXes, NFTs, and Gaming
– Crypto Security in 2022: Prepare for More DeFi Hacks, Exchange Outages, and Noob Mistakes
– How Global Economy Might Affect Bitcoin, Ethereum, and Crypto in 2022
– Crypto Exchanges in 2022: More Services, More Compliance, and Competition
– Crypto Investment Trends in 2022: Brace for More Institutions and Meme Manias