Regulatory Dynamics

1. The UK bans the sale of cryptocurrency derivatives to retail investors.

The Financial Conduct Authority (FCA) in the UK officially implemented a ban on the sale of cryptocurrency derivatives and exchange-traded notes to retail users on January 6. The FCA believes that such derivatives are unsuitable for ordinary consumers due to the high volatility of cryptocurrencies. This ban applies to all companies operating within the UK or conducting business in the UK.

2. The United States allows 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 payments. This means that banks and savings associations can now operate crypto nodes and use related stablecoins for payment activities. However, banks must fully understand the potential risks and ensure they can manage these risks safely and reasonably.

3. Israel defines functional tokens as securities

The Israel Securities Authority (ISA) released a document ruling that functional tokens issued by the company fall under the category of securities and cannot be classified as assets. The ISA explained that investors may purchase tokens for financial purposes with the expectation that their value will increase, which aligns with the characteristics of securities investment.

4. Shenzhen Promotes Blockchain Infrastructure Construction

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. Plans are to build a unified blockchain underlying infrastructure environment and create a high-performance, high-security privacy, and highly scalable government alliance chain platform. At the same time, enterprises are encouraged to utilize blockchain technology to optimize business processes and enhance collaborative efficiency.

5. Kyrgyzstan Advances Crypto Regulation

The National Bank of the Kyrgyz Republic plans to introduce two cryptocurrency bills aimed at regulating exchanges in the country, combating terrorism financing and fraud. The bills will require local crypto exchanges to report activities and comply with anti-money laundering and anti-terrorism financing measures. At the same time, exchanges will need to apply for an operating license from the central bank and adhere to relevant tax regulations.

Industry News

1. Grayscale adjusts investment portfolio, Ripple seeks settlement

Grayscale announced that it will suspend XRP trading starting from January 15, 2021, and will remove it from its Digital Large Cap Fund. Grayscale stated that it has sold all XRP in the fund and increased its holdings in BTC, ETH, LTC, and BCH. Meanwhile, the CEO of Ripple revealed that the company is trying to reach a settlement with the U.S. Securities and Exchange Commission.

2. Morgan Stanley increases its stake in MicroStrategy.

According to SEC filings, Morgan Stanley currently holds 792,627 shares of MicroStrategy, with a stake of 10.9%. 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 view its investment in MicroStrategy as a way to indirectly participate in the Bitcoin bull market.

3. Three Arrows Capital increases its holdings in Grayscale Bitcoin Trust shares

Singapore investment firm Three Arrows Capital reported to the SEC that its holdings in the Grayscale Bitcoin Trust (GBTC) have exceeded $1.2 billion, accounting for 6.1% of the total shares of GBTC. This represents a significant increase from the previously held $259 million in GBTC shares.

4. Skybridge Capital Bitcoin Fund in High Demand

The Bitcoin fund launched by SkyBridge Capital has attracted a lot of investor attention. Due to over 6000 people trying to join the fund at the same time, its network system crashed. SkyBridge Capital plans to hold a second conference call on January 12 to meet investor demand.