Cryptospace Spotlight 2022 #1 (2 Jan 2022)
US regulatory stance, more security issues and Abu Dhabi as crypto hub!
Snapshot 2021
The market cap for cryptocurrency was at all-time high of $3.3 trillion in November 2021, and ended the year with an estimated market cap of $2.2 trillion in 31 December 2021. There were more than 7,000 different coins/tokens as of November 2021. [more-1][more-2]
Bitcoin got adopted by some countries (loudest being El Salvador), financial institutions and listed firms. China banned mining activities. Crypto exchange Coinbase got listed. NFTs became hot. Crypto space was volatile. [more-1][more-2][more-3]
The five biggest cryptocurrency hack of 2021 [more].
Poly Network – $611m
BitMart – $196m
Cream Finance – $148m
Vulcan Forged – $140m
Badger Finance – $120m
‘Rug pulls’ accounted for 37% of all scam revenue this year compared to just 1% in 2020. [more]
Asia
Thailand is one of the countries benefiting from China’s recent ban on cryptocurrency mining. The ban led to a 30% price drop in crypto mining equipment. While the United States, Russia, Malaysia, and Kazakhstan have attracted the big mining farms that left China, Thailand is attracting smaller and more independent cryptocurrency miners. [more]
More than 100 companies that applied for a license to offer crypto services in Singapore have either been turned down or withdrawn their applications. [more]
Technology & Industry
Solana-focused crypto wallet Phantom is aiming to have more than 10 million weekly active users in 2022 from current 1.8 million users. *Solana is deemed as one of the Ethereum killers. [more]
Polygon disclosed that its emergency hard fork in early Dec was to patch an exploit that put 9 billion tokens at risk.[more]
Abu Dhabi seeks to become a crypto hub attracting crypto related businesses and innovation [more]
Elon Musk thinks Web3 is more of a “marketing buzzword” than a reality, while Jack Dorsey argues that Web3 will ultimately end up being owned by venture capitalists. [more]
Security
On 19 Dec 2021, Grim Finance announced that an “external attacker” had exploited the DeFi platform, stealing “over $30 million” worth of cryptocurrencies. [more]
According to Grim Finance, the hack was an “advanced attack,” with the attacker exploiting the protocol’s vault contract through five reentrancy loops, which allowed them to fake five additional deposits into a vault while the platform was processing the first deposit.
Grim Finance also advised its users to withdraw all their funds, and notified entities involved in operating major cryptocurrencies like Circle (USDC), Dai (DAI) and the cross-chain protocol AnySwap regarding the attacker address to freeze further fund transfers.
On 21 Dec 2021, Visor Finance indicated the lost of 8.8 million VISR tokens due to a reentrancy flaw exploited by the hacker. VISR token is worth near USD 1 before plummeting ~95% after the announcement of the hack. [more-1] [more-2]
Reentrancy bugs can be deadly in DEXs since they allow an attacker to create an infinite number of tokens. The Visor team announced the breach shortly after it occurred, stating that it had discovered a bug in its VISR staking agreement.
The Visor team has stated that it will establish a migration date based on a before-the-hack snapshot to make up to the users. The strategy of token migrations is a common way to counter DeFi hacks. They function by allowing token holders to exchange an equivalent quantity of new tokens for their existing holdings.
Regulatory
In an interview with CoinDesk, SEC commissioner Hester Peirce expressed doubt of having a new regulator for crypto sector. She noted on having the opportunity to sit down and work with people and develop regulation. And indicated that there was very little concrete regulatory progress to date. Moving forward, regulatory enforcement and scope would likely to be increased and broaden. [more] [video]
Bank of Israel planned to inform banks that they cannot refuse to deal with digital currencies on a blanket basis anymore. Therefore, banks must evaluate each case individually and conduct a risk assessment, discovering the source and trajectory of funds. The rules are expected to be applied to both Israel and international companies. [more]
South Korea moved to clamp down on play-to-earn (P2E) crypto games. South Korean authorities have asked Apple and Google to block these games’ domestic distribution. [more]