Regulatory Dynamics

1. The new regulations prohibiting the provision of cryptocurrency derivatives to retail investors in the UK have officially come into effect.

The ban by the UK Financial Conduct Authority ( FCA ) on selling cryptocurrency derivatives and exchange-traded notes to retail users officially came into effect on January 6. This ban originated from a public consultation in November 2018 and was formally announced in October 2020. The FCA believes that due to the high volatility of cryptocurrencies, derivatives are unsuitable for retail consumers. This ban applies to all companies operating within the UK or conducting business in the UK.

2. U.S. regulators allow banks to use stablecoins for payments

The Office of the Comptroller of the Currency ( OCC ) issued an explanatory letter stating that federally regulated banks can use stablecoins for payment activities, which means that banks and savings associations can now operate crypto nodes and use the relevant stablecoins for payments. However, banks must also be aware of potential risks and ensure that they can safely and reasonably manage these risks.

3. Israeli regulators: Functional tokens are classified as securities

The Israeli Securities Authority 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 its planned token issuance is not equivalent to a securities issuance. The ISA explained that investors may purchase tokens for financial purposes and expect their value to rise, which aligns with the characteristics of securities investment.

4. The Shenzhen Municipal Government suggests accelerating the construction of blockchain infrastructure.

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

5. The Central Bank of Kyrgyzstan plans to introduce a cryptocurrency legislation.

The National Bank of the Kyrgyz Republic ( NBKR ) plans to introduce two cryptocurrency bills to regulate exchanges in the country, aimed at combating terrorism, money laundering, and protecting consumers. The bills will enhance anti-money laundering and counter-terrorism financing measures, requiring local crypto exchanges to report activities. The bills will also compel exchanges to comply with the legal framework against crypto fraud, apply for operating licenses, and clearly define relevant terms in the Civil Code.

Industry News

1. Grayscale Fund Excludes XRP, Ripple Seeks Settlement

Grayscale officially announced that starting from 5 PM on January 15, 2021, it will suspend XRP trading and remove it from the digital large-cap fund (GDLC). Grayscale stated that it has sold all XRP in the fund and increased its holdings in BTC, ETH, LTC, and BCH. Meanwhile, Ripple's CEO stated that they are trying to reach a settlement with the U.S. Securities and Exchange Commission regarding the lawsuit and will submit a preliminary response soon.

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

According to SEC filings, Morgan Stanley currently holds 792,627 shares of MicroStrategy stock, representing a 10.9% stake. Since the end of the third quarter, Morgan Stanley has increased its holdings by nearly 650,000 shares of the company. Since first purchasing Bitcoin in August 2020, MicroStrategy's stock price has risen by 330%. Analysts believe that Morgan Stanley may view this as a way to indirectly profit from the Bitcoin bull market.

3. The shares of GBTC held by Three Arrows Capital exceed 1.2 billion USD.

Singapore investment firm Three Arrows Capital submitted documents to the SEC, disclosing that its holdings in the Grayscale Bitcoin Trust (GBTC) have exceeded $1.2 billion, accounting for 6.1% of the total GBTC shares. Previously, the company held 6.26% of GBTC shares, worth $259 million.

4. Bridge Capital's Bitcoin Fund Attracts a Large Number of Investors

Skybridge Bitcoin Fund launched by Skybridge Capital has attracted over 6,000 investors, causing its network system to crash. In response, Skybridge Capital will hold a second conference call on January 12 to meet investor demand.