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Crypto is Under Quarantine

It’s Friday, and oh, boy, who would have thought that 2022’s first weekend would start like this? Omicron is sweeping through North America, and there are no signs that the new year crypto slump is going to end any time soon.

Bitcoin ($BTC.X) fell as low as $40,685 today, hitting its lowest level since September. Symptoms of fear, uncertainty, and doubt are cropping up on Twitter, where #BitcoinCrash has trended for most of the day.

Ethereum ($ETH.X) followed suit, tumbling over 8% intraday, to as low as $3,100. The bloodbath continued to spread far and wide, with Terra ($LUNA.X) and Avalanche ($AVAX.X) plummeting in double digits. 

When the crypto market finds itself in such turmoil and bullish sentiment wanes, there’s a famous saying for those in the know — when there’s blood in the streets, it’s time to buy

Experts say times like these are the best times to put money in the crypto market. Although, times aren’t really looking much better in equities, so it’s anybody’s call right now.

Keeping fingers crossed that the ‘buy the dip’ sentiment will boost the market, check what we have to offer today:

  • GameStop joins the NFT world 
  • Mozilla pauses accepting crypto after backlash
  • Within weeks, Treasury will clarify who is a crypto broker
  • Cryptocurrency crime in 2021 hits all-time high in value

Before that, check how the major cryptocurrencies are looking: 

Bitcoin (BTC)
Ether (ETH)
Binance Coin (BNB)
Solana (SOL)
Cardano (ADA)
Terra (LUNA)
Polkadot (DOT)
Avalanche (AVAX)
Dogecoin (DOGE) $0.1536 -4.56%

NFT Mania

GameStop Is The New NFT Player

After a wild 2021 as a “meme stock,” GameStop ($GME) is not showing any signs of slowing down this year. The video retailer is now betting on non-fungible assets or NFTs by launching a marketplace and establishing cryptocurrency partnerships.  

NFTs are a type of digital asset that allows proof of ownership of digital goods like art, music, etc., to be stored on a blockchain. The NFT market was extremely successful in 2021, with $22 billion in sales to date. 

According to WSJ, the retailer recently hired more than 20 people to run its business unit that is building an online hub to buy, sell, and trade virtual videogame goods such as avatar outfits and weapons. The marketplace is set to launch this year, and the company has already asked select developers and publishers to list their games there.

In addition, GameStop is nearing a deal with two crypto companies to share technology and co-invest in the development of games that utilize blockchain and NFT technology, as well as other NFT-related projects. 

In the past year, the Texas-based company has experienced roller coaster rides. The company’s share price was boosted by a stock-trading frenzy, but then it suffered a huge loss. However, yesterday, after the latest announcement, the shares ($GME) soared over 20%. 

By diving into the hyped NFT space, GameStop is hoping to become part of the club of big companies that have been enjoying the party for quite some time. As part of the new venture, it hopes to cover losses as well. But it’s a little late now. 

The biggest challenge is to compete with already established marketplaces like OpenSea, which is valued at $13.3 billion by investors. Crypto exchanges like Coinbase and Solana have already entered the NFT market. Moreover, its old video game rivals like Ubisoft EntertainmentZynga, and Square Enix are also betting on blockchain and NFTs. It would be interesting to see how differently GameStop offers the NFTs on its online marketplace.

Crypto Law

Finally, We’ll Know Who The Crypto Broker Is 

We’re about to finally find out the legal definition of a crypto broker. The Treasury Department will issue preliminary guidance this month to clarify who is a crypto broker under legislation passed by Congress last year. 

Bloomberg reports that the move will be followed by a formal rule proposal, citing people familiar with the matter. The Biden administration will specify which cryptocurrency firms must report piles of data about their customers to the Internal Revenue Service.

The provision on cryptocurrency brokers was incorporated into 2021’s comprehensive infrastructure bill. Some experts believe that the definition of crypto brokers is wide and therefore vague. The current definition could target miners, developers, hardware manufacturers, etc., as brokers who don’t have customers.  

Due to the vagueness of the definition, Senators Cynthia Lummis (R-WY) and Pat Toomey (R-PA) even tried last-minute compromise on the provision but failed. 

In the crypto space, a broker is: “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” 

Due to a narrower interpretation of a crypto broker, firms and investors will have more clarity on their accountability. This also means that new reporting requirements for crypto transactions could provide greater transparency to Treasury and the IRS to ensure investors pay their share of taxes.

Crypto & Climate

Mozilla Suspends Crypto Donations Following Backlash From Co-founder

The Mozilla ($MZLA) Foundation, the non-profit organization behind the popular Firefox browser, suspended cryptocurrency donations after a community backlash over cryptocurrency’s environmental impact, which was triggered by co-founder Jamie Zawinski’s harsh criticism.

It all started on December 31, when Mozilla tweeted an appeal for donations in cryptocurrency: “Dabble in @dogecoin? HODLing some #Bitcoin & Ethereum? We’re using @BitPay to accept donations in #cryptocurrency.”

This was not well received by the open-source community, with some even threatening to cancel their donations to the foundation. The criticism ignited when co-founder Jamie Zawinski joined, tweeting the organization in the strongest possible terms: “Everyone involved in the project should be witheringly ashamed of this decision to partner with planet-incinerating Ponzi grifters.” 

The criticism is a bit late, though: Mozilla has been accepting crypto donations since 2014.

Increasingly, people assail cryptocurrency as unproductive and exploitative. They cite large cryptocurrencies and their patently high energy consumption, which boils down to environmental impact.

Reports suggest that Bitcoin mining now consumes approximately 0.5% of global energy, seven times the amount that Google consumes annually. The annual energy consumption of mining is greater than that of Switzerland. That’s one reason why countries like China and Kosovo have banned Bitcoin mining. However, Bitcoin maxis claim that a large volume of Bitcoin mining is now happening with clean energy.

The online backlash over cryptocurrency’s environmental impact caused Mozilla to pause its crypto donations. It tweeted“Starting today we are reviewing if and how our current policy on crypto donations fits with our climate goals. And as we conduct our review, we will pause the ability to donate cryptocurrency.” 

Meanwhile, Zawinski, who has not been associated with Mozilla since 2000, wrote a blog post arguing that the crypto industry is an unrealistic business model. It produces pollution and turns it into money, he wrote.

It’s worth mentioning, however, that by using BitPay, Mozilla never actually holds or receives any crypto. The crypto donations are sent to a payment service, which converts them into the currency Mozilla wants. However, those who are concerned about the environment do not accept this logic as they question the use of digital currencies.

Several high-profile companies have recently been the target of criticism for making crypto-related and nonfungible token (NFT) announcements. Over the past few months, UbisoftSquare EnixKickstarter, and Discord have all faced criticism for their embrace of NFTs and digital assets. Much of that criticism has been related to the perceived impact of crypto on the environment.

Crypto Crime

Crypto Scammers Raked in $14 Billion in 2021 

2021 has been a target for crypto scammers, with a record-breaking theft of $14 billion. According to new data from blockchain analytics firm Chainalysis, the number of crypto-related crimes jumped 79% from $7.8 billion in 2020, primarily due to theft and fraud. 

The report estimated illicit addresses (wallets tied to criminal activities such as ransomware, Ponzi schemes, and scams) already held over $10 billion in cryptocurrencies as of early 2022, with wallets associated with crypto theft holding the largest share.

The firm blames DeFi or decentralized finance to be the reason for the crypto-related crime. The sector’s transaction volume increased by 912% in 2021. With DeFi, the crypto industry aims to cut out middlemen, such as banks. The financial institutes are replaced by a programmable piece of code called a smart contract, which is written on a public blockchain. 

 According to Chainalysis stats, “DeFi is one of the most exciting areas of the wider cryptocurrency ecosystem, presenting huge opportunities to entrepreneurs and cryptocurrency users alike,” Chainalysis said in its annual Crypto Crime report. 

“But DeFi is unlikely to realize its full potential if the same decentralization that makes it so dynamic also allows for widespread scamming and theft.”

That said, illicit activities’ share of total crypto transaction volume remained low at just 0.15% in 2021. 

Even though the statistics from Chainalysis may shock many, authorities are also not shy about taking action against it. Last year, after the attack on the Colonial Pipeline, the White House launched a ransomware task force focused on combating cyberattacks. Similarly, the Department of Justice (DOJ) has announced launching a crypto crime-fighting team called “National Crypto Enforcement Team” to deal with crypto-related crime.