Christmas break? Apparently not. The last week of 2021 has been nothing short of eventful with the SEC denying two more bitcoin spot ETF applications, MicroStrategy growing its BTC stash, white-hat hackers uncovering a vulnerability that put almost $24bn worth of Polygon's MATIC token at risk, and corporations scrambling for Metaverse exposure.

Thanks for sticking with us this year for your weekly crypto commentary. 2021 brought seismic change to the digital asset investment landscape that we've enjoyed covering and we hope you've enjoyed reading. In the next couple of weeks, we look forward to announcing a few exciting initiatives planned for 2022. Stay tuned and Happy New Year!

Best Regards,

Iva Lila

Binance receives the nod from regulators in Bahrain and Canada. Is this a turning point from the exchange's 'shoot first, answer questions later' approach to regulation?

After spending most of 2021 caught in regulators' crosshairs, exchange giant Binance has succeeded in scoring two key regulatory approvals as the year inches to a close.

Binance confirmed on Monday it had secured a MSB license from Canadian regulatory authorities to offer cryptocurrency services. On the same day, the company also obtained in-principle approval from the central bank of Bahrain to establish itself as a cryptoasset service provider in the island nation. If successful, this would mark the first regulatory approval for a Binance entity within the MENA region.

Despite being the Gulf’s smallest country, Bahrain has been an early adopter of the digital asset space in the Middle East - a region that Binance has been doubling down on expanding its footprint. The exchange last week struck a deal with the Dubai World Trade Centre Authority to cooperate on a regulatory and legislative framework for digital assets. Also last week, it named Richard Teng (who helmed Abu Dhabi Global Market’s Financial Services Regulatory Authority for six years) as its regional head of MENA. Binance CEO, Changpeng Zhao, notably bought his first home in Dubai last month and has reportedly held talks with regulators in the UAE about a potential headquarters in the country.

A slightly more interesting story is Binance's registration with Canada's anti-money laundering and anti-terrorism financing regulator, FINTRAC. The news was celebrated by Canadian crypto investors and is likely a personal victory for Zhao, who is a Canadian citizen. However, there's been mixed signals as to whether the exchange can or cannot operate in the province of Ontario.

Cast your mind back to June when the Ontario Securities Commission (OSC) accosted Binance for failing to meet regulatory requirements and forced the exchange to instruct Ontario users to close their accounts by 31 Dec. Fast forward to Wednesday, Binance assured users via email that registering in Canada as a MSB with FINTRAC means that it can continue its operations in Canada and "resume business in Ontario while we pursue full registration."

As we've seen time and time again, nothing is ever straightforward when it comes to Binance. A major plot twist emerged yesterday when the OSF dismissed the exchange's claim in a statement, saying: "Binance is not registered in Ontario".

Another major blow for the exchange came on Christmas Day when its Turkey unit was fined over $750k by the Financial Crimes Investigation Board for failing the financial watchdog’s audit for monitoring AML compliance.

Throughout 2021, Binance has been hit with a lot of backlash, warnings, and fines from regulators but appears to be pivoting from its prior 'move fast and break things' approach. Even so, I don't think its regulatory woes are quite behind it just yet. Stand by for fireworks (and I don’t mean NYE).

Senator Cynthia Lummis is set to introduce a bold crypto bill in 2022. What are the chances of it being approved by the Senate?

Cynthia Lummis (Republican-Wyoming), one of crypto's staunchest advocates on Capitol Hill, is planning to introduce a comprehensive crypto bill in 2022 that focuses on everything from how digital assets are taxed and categorised, to stablecoin regulation and consumer protections.

As reported by Bloomberg, a key aspect of Lummis’ proposal is the creation of a new regulatory body solely responsible for digital asset oversight. Many market participants (most notably Coinbase) believe that the creation of digital asset-centric regulatory body would bode better for the development of the sector than shoehorning crypto into the current framework.

However, not everyone agrees that this would be a productive choice. SEC Commissioner, Hester Peirce, appeared on CoinDesk TV yesterday to argue against the idea, saying: "I certainly understand the impulse to call for one regulator. I have a couple problems with it. Typically in Washington, when you build another regulator, all you get is all the existing regulators plus one."

With the US Senate divided on the topic of digital asset regulation, it remains to be seen whether the Lummis bill will gain the necessary support to pass into law. But one thing is indisputable: the focus on digital assets from legislators has never been greater. A recent Forbes article claims that the United States Congress introduced 35 bills related to crypto in 2021. Meanwhile just yesterday, SEC chair, Gary Gensler, added a new staff member who will offer advice related to crypto policymaking. With this newfound attention on the industry, I’m incredibly excited to see what 2022 will bring for the US crypto regulatory framework and whether the digital asset industry will gain more vocal supporters in Washington.

Roundup of other key developments

INSTITUTIONAL

• Bitpanda launches bitcoin ETP on Deutsche Boerse

• Sberbank launches the first blockchain-focused ETF in Russia

• ProShares files with the SEC to launch a Metaverse ETF

• Valkyrie and Kryptoin’s physically-backed ETF proposals denied by SEC

LEGAL + REGULATORY + GOV + CBDCs

• Thailand’s Central Bank reschedules CBDC pilot project to late 2022

• The Stock Exchange of Thailand to launch digital asset exchange

• Iran halts authorised crypto mining to save energy for winter

• Turkey’s crypto law is ready for parliament, President Erdoğan confirms

• Mexico confirms plans to roll out CBDCs in 2024.

• India needs to initially go for basic model for CBDC, says RBI report

COMPANY/PROTOCOL

• Polygon quietly patched vulnerability that put $24bn in MATIC at risk

• Bitcoin mining firm Marathon orders nearly $900m worth of new machines

• MicroStrategy purchases 1,914 bitcoin, now holds almost $6bn in crypto

• Ferrari signs deal with blockchain firm Velas to create digital products for fans

• Charles Hoskinson shares Cardano’s Roadmap for 2022

DeFi + WEB3 + NFTs + METAVERSE

• Shanghai doubles down on the metaverse by including it in a development plan

• DeFi wallet DeBank raises $25m in equity funding round led by Sequoia China

• Kraken’s new NFT marketplace to issue loans

• Aave users now able to borrow and lend using real world assets

• Stolen Bored Apes worth $1.9m 'frozen' by NFT Marketplace OpenSea