What happened this week around blockchain and cryptocurrencies? The most relevant local and international events as well as appealing background reports in a pointed and compact weekly review.
Selected articles of the week:
The regulation of cryptocurrencies in the United States remains a controversial issue. Different government agencies are battling for jurisdiction over the rapidly growing technology. The Securities and Exchange Commission (SEC) advocates for regulating cryptocurrencies as securities, while the Commodity Futures Trading Commission considers them as commodities and therefore sees jurisdiction within their control. These differing views have led to conflicts between the agencies. To avoid these debates, the SEC is now relying on “regulation through enforcement” by directly targeting companies they consider to be within their jurisdiction. The SEC’s recent crackdown on staking services is drawing criticism towards the head of the American securities and exchange watchdog, Gary Gensler. With this approach, Gensler must not only face criticism from industry representatives but also from within his own ranks. His colleague Hester Pierce considers the approach to be unproductive and fears it will stifle innovation and create competitive disadvantages for the entire US-based sector. Critics have long been pointing out the lack of success in Gensler’s record, as he has been blocking a publicly traded, physically backed Bitcoin ETF for years. Ultimately, the investor protection agency under his leadership was unable to prevent any of the significant fraud and insolvency cases involving providers like FTX, Celsius, BlockFi, or Voyager Digital.
The Securities and Exchange Commission orders Kraken to pay $30 million in compensation due to its staking service.
Bitcoin is a decentralized digital currency that operates through a peer-to-peer network. Unlike conventional currencies, it is not controlled by a central authority such as a government or central bank. Transactions are recorded in a public ledger (the blockchain), which enables a secure and transparent flow of funds. In countries like Nigeria, Bitcoin offers an alternative way of making payments and preserving wealth. With a smartphone and internet connection, individuals can buy, sell, and send Bitcoin to each other without needing traditional financial institutions like banks. This becomes valuable in situations where ATMs and credit cards no longer work.
Since early February, Nigeria has experienced acute shortages of cash, gasoline, and electricity; how can Bitcoin provide relief?
Currently, there are thousands of different cryptocurrencies in circulation. Similar to traditional investments, there are significant differences between each asset, which can be divided into separate categories. The “Global Crypto Classification Standard (GCCS)” is an initial attempt to create a classification standard for cryptocurrencies. Divided into distinct levels, the initiative aims to serve as an industry taxonomy and help investors and regulatory authorities navigate the complex sector more effectively.
The Global Crypto Classification Standard (GCCS) categorizes crypto assets in a uniform manner to demystify the asset class.
Last September, the largest smart contract blockchain successfully transitioned from Proof of Work to Proof of Stake (also known as a merge). Proof of Stake (PoS) is an alternative consensus mechanism used to secure blockchain networks and validate transactions. In a PoS system, verification is performed by a series of “validators” who hold a certain amount of the network’s native cryptocurrency and “stake”. This is distinct from Bitcoin’s Proof of Work (PoW) consensus mechanism, where verification is achieved through the computation of complex mathematical problems, also known as mining. Currently, almost 14 percent of all Ether (ETH) — approximately $27 billion — is locked into such stakes and cannot be withdrawn. The upcoming Shanghai Upgrade (EIP-4895) is expected to allow these withdrawals in March. A comprehensive overview of the changes and their implications.
The Shanghai upgrade (EIP-4895) allows stakers to withdraw their Ether (ETH) and further prepares the network for sharding.
A summarizing monthly review of what’s happening in the crypto markets in cooperation with the Swiss specialist 21Shares AG.
