Regulatory Dynamics

1. The UK's ban on providing cryptocurrency derivatives to retail investors takes effect.

The ban issued by the Financial Conduct Authority (FCA) of the UK officially came into effect on January 6, prohibiting the sale of cryptocurrency derivatives and exchange-traded notes to retail consumers. The FCA believes that these derivatives are unsuitable for retail consumers due to factors such as the high volatility of cryptocurrencies. The ban applies to all companies operating within the UK or targeting the UK market. The FCA began consulting the public on this matter back in November 2018 and formally announced the ban in October 2020.

2. The United States allows banks to use stablecoins for payments.

The Office of the Comptroller of the Currency ( OCC ) issued an explanatory document allowing federally regulated banks to use stablecoins for payment activities. This means that banks and savings associations can now operate crypto nodes and use associated stablecoins for payments. At the same time, the OCC requires banks to be aware of potential risks and to ensure that these risks are managed safely and reasonably.

3. Israel classifies utility tokens as securities

The Israel Securities Authority ( ISA ) issued a document ruling that the functional tokens issued by the company are classified as securities and cannot be categorized as assets. This is a response to the blockchain security company Kirobo's attempt to persuade regulators that the tokens it plans to issue do not qualify as securities. ISA explained that investors might purchase the tokens for financial purposes and expect appreciation, which aligns with the characteristics of securities investments.

4. Shenzhen accelerates the construction of blockchain infrastructure

The Shenzhen Municipal Government issued several opinions on accelerating the construction of smart cities and digital government, proposing to speed up the construction of blockchain technology infrastructure. This includes building a unified blockchain underlying environment, creating a high-performance, high-security, and highly scalable government alliance chain platform, and providing blockchain services such as storage and encryption. At the same time, it supports enterprises in optimizing business processes using blockchain and promoting the application of new technologies such as blockchain in the field of public services.

5. The Central Bank of Kyrgyzstan plans to introduce two cryptocurrency bills.

The National Bank of the Kyrgyz Republic ( NBKR ) plans to introduce two cryptocurrency bills to regulate local exchanges and combat terrorism financing and fraud. The bills will require exchanges to report activities, apply for operating licenses, and comply with anti-money laundering and counter-terrorism financing regulations. At the same time, terms such as virtual assets and cryptocurrencies will be defined in the Civil Code, and relevant tax systems will be established.

Industry News

1. Grayscale removes XRP; Ripple seeks settlement

Grayscale officially announced that it will suspend XRP trading starting January 15 and will remove it from the Grayscale Digital Large Cap Fund (GDLC). Grayscale sold all XRP in the fund on Monday and increased its holdings in BTC, ETH, LTC, and BCH. Ripple's CEO stated that the company is trying to reach a settlement with the U.S. Securities and Exchange Commission and will submit an initial response soon.

2. Morgan Stanley increased its stake in MicroStrategy to 10.9%

According to a document from the U.S. Securities and Exchange Commission, Morgan Stanley currently holds 792,627 shares of MicroStrategy stock, accounting for 10.9% of the total shares. Since the end of the third quarter, Morgan Stanley has increased its holdings by nearly 650,000 shares. Since MicroStrategy first purchased Bitcoin in August 2020, its stock price has risen by 330%. Analysts believe that Morgan Stanley may see this as a way to profit indirectly from the Bitcoin bull market.

3. Three Arrows Capital holds over $1.2 billion in Grayscale GBTC.

The Singapore investment firm Three Arrows Capital filed documents with the U.S. Securities and Exchange Commission, disclosing its holdings of shares in the Grayscale Bitcoin Trust (GBTC) worth $1.24 billion, accounting for 6.1% of the total GBTC shares. Previously, Three Arrows Capital held 6.26% of GBTC, valued at $259 million.

4. Skybridge Capital Bitcoin Fund in high demand

SkyBridge Capital officially launched a Bitcoin fund, attracting over 6,000 participants, which caused the official website system to crash. In response, SkyBridge Capital plans to hold a second conference call on January 12.